HDFC Bank Shares Jump as Savings Interest Rate Gets a Trim

HDFC Bank, India’s largest private sector lender, saw its shares rise over 3% in early trade on April 15 after the bank announced a reduction in savings account interest rates. This move comes closely on the heels of the Reserve Bank of India’s recent policy rate cut, signaling a shift in the banking environment.

Savings account rate cut triggers investor reaction

HDFC Bank has revised its savings interest rate from 3% to 2.75% for deposits up to ₹50 lakh, effective April 12. This decision aligns with the RBI’s monetary policy, which recently saw a 25 basis point reduction in the repo rate.

The bank’s interest rate for savings deposits above ₹50 lakh remains at 3.25%. This is the first major rate change in this category since June 2020, when similar cuts were made during the COVID-19 pandemic.

“The savings rate cut may appear small, but it reflects a larger trend driven by monetary easing and liquidity changes in the system,” said a banking analyst.

Stock performance shows investor confidence

Following the announcement, HDFC Bank’s share price surged to ₹1,870.3, marking a 3.5% intraday gain and making it one of the top performers on the Nifty 50 index. The market seems to interpret the move as a smart step toward protecting margins and aligning with the RBI’s dovish outlook.

Liquidity environment and depositor behavior

Over the past 14 years, HDFC Bank has rarely increased savings account rates, largely because customers tend to prefer fixed deposits for long-term savings, while savings accounts are primarily used for routine transactions.

Additionally, analysts believe this move demonstrates the bank’s confidence in continued deposit inflow, even at reduced interest rates, as liquidity in the system has improved considerably following the RBI’s latest measures.

“The RBI’s repo rate cut and surplus liquidity have set the stage for banks to manage deposit costs more efficiently.”

Looking ahead

As India enters a potential rate-cut cycle, more banks may follow suit in revising interest rates. For now, HDFC Bank appears well-positioned to balance deposit growth and profit margins, even as the economic environment evolves.