Karnataka Bank cuts interest rate to 3 per cent on deposits less than Rs 1 lakh

New Delhi: Private sector Karnataka Bank on Thursday reduced interest rate to 3 per cent for accounts having deposits of less than Rs 1 lakh.

The interest rate has been reduced by 1 per cent from 4 per cent, Karnataka Bank said in a statement.

Earlier this week, the country's largest lender State Bank of India slashed interest on savings account deposits by 50 basis points to 3.5 per cent on balance up to Rs 1 crore.

For daily balances of above Rs 1 crore, Karnataka Bank said the interest rate is revised to 5 per cent from the existing 4 per cent, whereas for daily balances of Rs 50 lakh to Rs 1 crore, the applicable interest rate is 4 per cent.

Similarly, for daily balance in the range of more than Rs 1-50 lakh, the interest rate is reduced to 3.5 per cent from the existing 4 per cent and for balance below Rs 1 lakh, the revised rate is 3 per cent from the existing 4 per cent, it said.

The new rates are effective from tomorrow, it added. The above interest rate is applicable to resident Indians and SB-NRO and NRE accounts.

Savings bank (SB) product is not price sensitive and is generally driven by product offerings, convenience and customer service standards.

"Hence, the interest rate revision impact on customers with lower balance is negligible. However, SBs with higher balance will attract higher interest in the new structure, and hence it may induce customers to park more money in their SB accounts, thus promoting savings habit among general public,” said Karnataka Bank CEO Mahabaleshwara