Recently SBI slashed interest rates and introduced a two-tier interest system for savings accounts, whereby savings accounts with less than 1 crore deposits will incur just 3.5% (this is a drop from 4%, which is the continued rate for deposits over 1 crore) The reason given behind the change was that, a decline in Inflation must be met with a corresponding decline in the savings rate.
Another factor that is thought to have contributed is that following demonization, SBI received over 1.5 lakh crore in deposits which was a huge interest burden for the bank to bear. Unless the money in savings can be reinvested in suitable projects with minimal risk, the deposits become a liability for the bank (in terms of interest payable), which can adversely affect the economy. While debating the Banking Regulation (Amendment) Bill, 2017, Finance Minister Arun Jaitley said that now, these interest rates where finally becoming “reasonable”.
With other banks announcing similar moves, this looks to be the new trend in interest rates- Credit rating firm India Ratings believes the reduction in rates will spur on more competition between banks. HDFC bank announced a similar move, cutting interest rates for a bulk of accounts to 3.5% while Bank of Baroda will now offer 3.5% interest for accounts under 50 lakhs. Yes Bank cut its rate by 1%, going from 6% to 5% for accounts with less than 1 lakh balance. Yes Bank deposits between Rs 1 lakh and less than Rs 1 crore will continue to enjoy 6% interest, while the rate for over 1 crore, dropped from 6.5% to 6.25%.
While other interest rates fall, you can enjoy a rate of 7% in a completely paperless account? In case you haven’t checked it out before, digibank is definitely an account option you should not ignore.
digibank by DBSis one of the most trusted banks in Asia. It is available on the Play Store and the Apple App store and it takes less than 90s to open an account. After you share your details, the bank undertakes an eKYC with Aadhaar and biometric verification and just like that your account is open. Here are a couple of features I have found to be interesting:
- There is no minimum balance requirement- you earn 7% no matter what amount- big or small is in your account
- You get a physical debit card with Paywave at no extra charges
- There are no charges on ATM withdrawals and if you travel, since it is a Visa debit card, you can use your ATM card abroad as well
- You get 24/7 access to a virtual assistant powered by Artificial Intelligence
- The facility to directly invest in fixed deposits
- An expense tracker, budget optimiser and also a feature that lets you create goal-based savings and investments
- Robust security features that don’t require an OTP
All in all, if you are looking for a new bank account or are disappointed in the drop of interest rates from your current savings account, it is time to give digibank a try and enter a new world of truly digital banking.