"An increased rate of five per cent will be offered to all customers on the entire balance in accounts, maintaining a deposit balance of Rs 1 lakh and above, calculated on a daily basis," the bank said in an official statement issued here today. The bank earlier used to offer an interest rate of 4 per cent on deposits in savings accounts. In late 2011, the Reserve Bank had deregulated interest rates on savings deposits, after raising the minimum interest rate by 0.50 per cent to 4 per cent. After this development, only two lenders, which were struggling to increase the proportion of low-cost current and savings account deposits, like Yes Bank and Kotak Mahindra Bank, hiked interest rates.
At present, Yes Bank offers an interest rate of up to seven per cent on such deposits for above Rs 1 lakh and six per cent below that amount, while Kotak pays a flat six per cent on all deposits. However, none of the state-run lenders, which handle over three-fourths of the banking system, have reviewed rates.