In a move that has concerned many customers, ICICI Bank has recently reduced interest rates on both savings accounts and fixed deposits. This action follows similar steps taken by other major Indian banks including State Bank of India (SBI) and HDFC Bank, signaling a shift toward a low-interest-rate environment in India’s banking sector.
Savings Account Interest Rate Reductions
ICICI Bank has implemented a 25 basis points cut on savings account interest rates across all balance tiers. Customers with daily closing balances below ₹50 lakh will now earn 2.75% interest per annum, down from the previous 3%. For those maintaining balances of ₹50 lakh and above, the interest rate has been reduced from 3.50% to 3.25% per annum. These new rates apply to all account holders, including small depositors, with interest calculated based on daily closing balances.
Significant Cuts to Fixed Deposit Rates
Along with savings account changes, ICICI Bank has also trimmed its fixed deposit interest rates by up to 50 basis points. These revised rates took effect from April 17, 2025, impacting millions of investors who rely on fixed deposits for steady returns.
New Fixed Deposit Rate Structure
General citizens will now earn between 3% and 7.05% interest on their fixed deposits, depending on the tenure chosen. Senior citizens continue to receive preferential rates, ranging from 3.5% to 7.55% across various tenures. This preferential treatment aims to provide additional support to elderly customers who often depend on interest income for their daily expenses.
Tenure-Specific Rate Changes
The bank has implemented varying rate cuts across different deposit tenures. Short-term deposits have seen some of the most significant reductions. For deposits with 30 to 45 days tenure, rates have fallen from 3.50% to 3%, while those with 61 to 90 days tenure now offer 4.25% instead of the previous 4.50%.
Medium to long-term deposits have also experienced substantial cuts. The 15 to 18 months tenure category has seen rates reduced from 7.25% to 6.80%, while deposits with 18 months to 2 years tenure now offer 7.05%, down from 7.25%. For longer tenures ranging from 2 years 1 day to 5 years, rates have been reduced from 7% to 6.90%, and deposits between 5 years 1 day to 10 years now offer 6.80%, reduced from 6.90%.
The 5-year tax-saving fixed deposits, which are popular among taxpayers seeking deductions under Section 80C, have also seen their rates reduced from 7% to 6.90%.
Impact on Customers and Investors
These rate cuts directly affect the earnings of millions of ICICI Bank customers. For savings account holders, the reduced rates mean lower returns on their liquid funds. Fixed deposit investors, particularly those planning to renew their maturing deposits, will need to accept lower interest incomes or explore alternative investment options.
The impact will be especially pronounced for retirees and senior citizens who primarily depend on interest income from savings and fixed deposits to cover their daily expenses. Although senior citizens continue to receive preferential rates, the overall reduction still translates to decreased monthly income for this vulnerable group.
Broader Economic Implications
ICICI Bank’s decision to reduce interest rates follows a broader trend in India’s banking sector. As major banks like SBI and HDFC Bank have already implemented similar cuts, this signals a coordinated move toward a low-interest-rate regime. This trend may reflect changing monetary policies, liquidity conditions in the banking system, or efforts to stimulate lending by reducing the cost of funds for banks.
Disclaimer
The information provided in this article is based on the data available as of April 21, 2025, and is subject to change based on future decisions by ICICI Bank. Customers are advised to consult with bank representatives or visit the official ICICI Bank website for the most current interest rates and terms before making financial decisions.
