Recently, the MPC of the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points for the second consecutive time. After this cut, the repo rate is now 6 percent. After the RBI's decision, many banks have cut interest rates. After the announcement of the Reserve Bank, UCO Bank, ICICI, HDFC Bank, Axis Bank, Yes Bank, DCB, etc. had cut interest rates. Now private sector Kotak Mahindra Bank has reduced interest rates on savings accounts by 0.25 percent from April 25, 2025.

Savings account holders of Kotak Mahindra Bank will get 2.75 percent interest on balances up to Rs 50 lakh and 3.25 percent interest on balances above Rs 50 lakh. Earlier these rates were 3.00 percent and 3.50 percent. Apart from this, the bank has cut the interest rates of its multi-term FDs by 0.33 percent. Kotak Mahindra Bank's new FD interest rates are applicable from 23 April 2025.

Where to invest money now

ICICI, HDFC, and Axis Bank are now paying only 2.75 percent interest per annum on balances less than Rs 50 lakh. After the reduction in interest rates on FD and savings accounts by banks, the question before the investor is where to keep his money.

Start with the sweep-in FD option.

Anand K Rathi, co-founder of Mira Money, said, “Banks have reduced the interest rate on savings accounts with a balance of less than Rs 50 lakh. This clearly shows that it is no longer beneficial to keep more money in a savings account, as the interest rate is very low. Start with sweep-in FD options like HDFC's Money Maximiser, which automatically converts the extra balance into an FD, giving you higher returns. Then there are liquid and ultra-short-term mutual funds, which invest in short-term debt instruments and can give returns between 5 percent and 7 percent annually. There is a little risk in this, but it is a good option for a short period.”

Digital banks are also an option.

He further said that some digital banks or apps (which work in collaboration with traditional banks) give 6 percent to 7 per cent interest. There may be a little more risk in these, so invest wisely.

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