A few days after the Reserve Bank of India (RBI) slashed its repo rate by 0.75 percent to support the country's economy, the State Bank of India (SBI) not only lowered its interest rates offered on fixed deposits but also on its savings account.
India's largest bank said on 7 April that with effect from 15 April, savings accounts at SBI would fetch 25 basis points lower interest at 2.75 percent per annum. The lender also recently waived off the average monthly balance requirement for customers of its savings accounts.
The fall in interest rates on savings will hurt one's investments as the money balance is affected by inflation eating away the purchasing power. As per government's latest data released on Monday, Consumer Price Index (CPI) or retail inflation for the month of March was at 5.91 percent. In comparison to the 2.75 percent interest rate, you are making negative returns on your bank account due to higher inflation levels.
If you do not have any immediate liquidity needs, you can look to park your money in fixed deposits offering higher interest rates.