ICICI succumbs to interest rate fall
March 21, 2008
The Indian bank subsidiary, ICICI, which has been enjoying a good position at the higher end of best buy savings account tables for some time now, has finally announced that it will be reducing the interest rate on its savings account in line with the interest rate cut from February, reducing the rate by 0.25% to 6.16%. The impressive rates that were being offered to savers by ICICI, which is one of a number of foreign banks that have recently broken into the UK market, saw the bank attracting around five thousand new customers a month last year.
A number of other foreign bank subsidiaries that were offering high interest rates on savings accounts have also cut their interest rates following the February rate cut, with the only one that has decided to leave its rates unchanged – Kaupthing Edge – enjoying prime position on the best buy tables now with its rate of 6.5%. The bank is one of the newest to the UK market and is still building its customer base.
One industry official stated: ‘The newer providers tend not to touch their rate as they need to remain competitive to grow their customer base and need to remain fresh in the minds of savers. The older institutions can afford to cut their rates back a bit, but savers should make sure their provider is not cutting above the rate change.’
The Bank of England has decided to leave interest rates on hold following the March Monetary Policy Committee meeting, and whilst this is bad news for borrowers and homeowners it means that many savers can avoid the financial pitfalls of seeing their savings interest rates fall again.
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