Punjab National Bank (PNB) customers will now have to bear the brunt of earning lesser returns on their savings accounts. The public sector lender has announced a slew of cuts on its savings accounts interest rates. As opposed to the previous annual interest rates of 2.75 per cent on deposits less than ₹10 lakh and 2.80 per cent on deposits between ₹10 lakh and ₹500 crores, the bank is now offering 2.70 per cent interest per annum on savings account balances of less than ₹10 lakh and 2.75 per cent interest every year on balances exceeding ₹10 lakh.
This is not the first time that savings accounts rates have changed across banks. Before this, the IDFC First Bank announced a maximum of six per cent interest on deposits between ₹25 lakh and ₹1 crore with effect from April 01, 2022. RBL Bank lowered its interest rate by 25 basis points to one per cent on its various savings account balances at the beginning of the new financial year 2022-23.
Ujjivan Small Finance Bank had announced similar cuts on its savings accounts interest rates. The bank that had earlier earned four per cent interest to its customers holding deposits up to ₹1 lakh in their savings accounts announced a meagre 3.5 per cent interest from April 01, 2022. The renewed interest rates would apply to both resident and non-resident accounts. The 50-basis point reduction that looks modest on paper comes at a time when people are already reeling under inflation and are looking for more returns on their deposits.
The effect of inflation is now getting deeper with more people complaining of finding it difficult to meet their daily expenses. Apart from being able to set aside less towards savings and investments, the low-interest rates would cause a dent in their savings. The rise in prices across all commodities has put added pressure on savings and investments. Fixed deposit rates are also sliding down, which means that people will now have to look at alternate investment options to keep their financial goals intact.
The risk-averse may opt between the public provident fund, employees' provident fund, national savings certificates and others despite these investment options not being too liquid. The lock-in period can be a bane looking to withdraw money from their accounts.