As of 1:15 pm, the bank's shares were trading 3.40 per cent or ₹61.50 up, at ₹1,868.10. The intraday high was ₹1,875.90, which is 3.84 per cent up from the previous close.

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The 2.75 per cent interest rate is for deposits less than ₹50 lakh. It is 3.25 per cent for deposits of and above ₹50 lakh, according to the bank's website.

This new rate cut has been effective since April 12 and came about just days after the Reserve Bank of India (RBI) on Wednesday, April 9, cut the benchmark repo rate by the same 25 basis points, from 6.25 per cent earlier to six per cent now.

Comparison with other banks

In comparison to HDFC Bank, ICICI Bank and Axis Bank both currently offer a three per cent minimum interest rate on savings account balances below ₹50 lakh.

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The cut also brings the rate closer to PSU giants State Bank of India (SBI) and Punjab National Bank (PNB) which have been offering a minimum of 2.70 per cent on savings account deposits since 2022.

HDFC's rate is now on par with Bank of Baroda which offers the same 2.75 per cent on deposits up to ₹50 crore since February 27 last year, according to an Economic Times report.

This move comes at a time when the bank has been trying to increase term deposits after it took over its home loan parent HDFC in 2023, according to the report.

The way a rate cut would help this is it could force more depositors to move towards higher yielding term and recurring deposits.

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The savings account rate cut will also significantly lower the bank's overall cost of funds since nearly 34 per cent of its deposits are in the form of CASA, of which nearly 69 per cent or ₹6 lakh crore is savings account deposit, according to the report.