Do interest rates on savings bank accounts go down when the RBI cuts repo rates?

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This is what AI has to say:

When the Reserve Bank of India (RBI) cuts the repo rate, it generally makes borrowing cheaper for banks. However, the impact on savings account interest rates is not always immediate or uniform. Banks might lower interest rates on savings accounts to maintain their profit margins, as they can borrow funds more cheaply. However, this reduction is not guaranteed and depends on the bank’s strategy and market conditions.

In recent instances, some banks have adjusted their savings account interest rates following RBI’s rate cuts. For example, RBL Bank reduced its interest rate on small balances by 25 basis points after the RBI’s rate cut in February 2025. On the other hand, IDFC First Bank updated its savings account interest rates, offering up to 7.25% after the RBI’s decision.

Therefore, while there is potential for savings account interest rates to decrease following an RBI rate cut, it is not a universal outcome and varies by bank.

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The examples you mentioned about RBL and IDFC do not really depend on RBI repo rate.
It is bank’s internal processes that manage risk and exposure of bank’s assets and liabilities.

Better example would be North East SFB, which offers daily interest payment and interest rate as per RBI repo rate. NESFB interest rate is solely dependent on RBI repo rate whereas not every bank has the same.

If that be so then SBI should have increased or decreased their interest rate, but SBI’s interest rate is 2.7% only when repo rate was 6.5% or 6% now.

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Interesting information.

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