Kotak Mahindra Bank has hiked its savings rate to six per cent a year for savings account balances above Rs 1 lakh. For balances below Rs 1 lakh, the bank has hiked its interest rate to 5.50 per cent. These changes come into effect from November 1. Customers earlier got four per cent on their savings bank balances.
Kotak Mahindra Bank becomes the second private sector bank after Yes Bank to revise its savings bank rate. The revision follows the deregulation of these rates announced by the Reserve Bank of India in its October credit policy review.
Addressing a press conference in Mumbai, Mr Uday Kotak, Managing Director of the bank, said that the revision in savings rate would have an impact of around 12 basis points on its overall cost of funds. He pointed out that savings bank deposits constituted about 10 per cent of its total deposit base.
Asked if there would be any increase in other charges or fees for customers, Mr Kotak replied categorically that there would be no increase of any nature. Mr Kotak said that banks would have to strike a balance between aggression and prudence in offering better rates for savers while also protecting their own margins.
Simultaneously, the bank also announced an increase of 25 basis points ( 0.25 percentage points) in its lending rates. The bank's base rate has moved up to 10 per cent from 9.75 per cent a year.