MUMBAI: From 1 January, IDFC First Bank has increased the interest rate on savings account balances up to ₹1 lakh to 7%. The interest rate was 6% earlier. The rate compares favorably with the 3-4% on offer in major private sector banks.
IDFC First Bank is a scheduled commercial bank with a market cap of around ₹22,500 crore and a network of around 260 branches. It received a banking license in 2015 and listed on the stock exchanges that year. Savings account balances above ₹1 lakh will continue to earn 7%, as before.
Deposits and savings account balances aggregating up to ₹5 lakh per customer are covered under the government’s deposit guarantee insurance scheme. The interest on savings accounts is not locked in and can be changed by the bank at will.
However, certain banks have followed a strategy of offering high rates to attract customers, as Mint reported earlier. Such savings account interest up to ₹10,000 per annum is tax deductible under Section 80 TTA of the Income Tax Act, 1961.