Not SBI or ICICI: This Small Finance Bank Offers India’s Highest 5.5% Savings Account Interest Rate
When it comes to savings accounts, most major public and private sector banks in India such as SBI, HDFC, and ICICI Bank offer modest interest rates ranging between 2.5% and 3% per annum. However, one small finance bank has surprised everyone by offering an impressive 5.5% annual interest rate, equal to the RBI’s current repo rate. This makes it the highest interest rate on savings accounts in the country right now. Let’s take a closer look at what makes this bank stand out and how it manages to sustain such returns for its customers.
Slice Small Finance Bank Offers 5.5% Interest on Savings Accounts
The Slice Small Finance Bank (Slice SFB) has become the talk of the town by offering 5.5% annual interest on savings account deposits — the highest in India, according to data from BankBazaar.com. In comparison, most leading banks continue to provide between 2.5% and 3% interest on similar accounts.
This interest rate is particularly notable because even many fixed deposit (FD) schemes across top banks don’t offer such high returns. The move has caught the attention of customers who are looking for better yields on their idle funds without locking them into long-term investments.
Why Slice SFB Can Offer Such High Returns
According to Rajan Bajaj, Founder and Executive Director of Slice Small Finance Bank, the institution’s efficiency and unique approach make it possible to offer higher rates. Speaking to The Economic Times, Bajaj explained,
“As a bank, we earn primarily through lending. Our idle funds are kept in low-risk instruments. When we lend, we earn a margin. Our model is different — we use technology to keep operating costs minimal. We have learned from some of the world’s most efficient banks and adapted those lessons to India’s unique geography and regulatory framework.”
This combination of tech-driven operations, lean cost structures, and disciplined lending helps the bank pass on better interest rates to its customers while maintaining profitability.
Comparison: Savings Account Interest Rates Across Banks
Here’s how Slice SFB stacks up against other leading banks in India in terms of annual interest rates on savings accounts (based on balances up to ₹1 lakh):
| Bank Name | Interest Rate (Per Annum) |
|---|---|
| Slice Small Finance Bank | 5.50% |
| Utkarsh Small Finance Bank | 3.25% |
| Capital Small Finance Bank | 3.25% |
| ESAF Small Finance Bank | 3.00% |
| RBL Bank | 3.00% |
| Ujjivan Small Finance Bank | 2.75% |
| SBM Bank (India) | 2.75% |
| Equitas Small Finance Bank | 2.75% |
| Bandhan Bank | 2.70% |
| Axis Bank | 2.50% |
| Yes Bank | 2.50% |
| Shivalik Small Finance Bank | 2.50% |
| Suryoday Small Finance Bank | 2.50% |
| SBI | 2.50% |
| HDFC Bank | 2.50% |
| ICICI Bank | 2.50% |
Source: BankBazaar.com
RBI’s Repo Rate and Its Impact on Savings Returns
Earlier this year, the Reserve Bank of India (RBI) reduced the repo rate by 1%, prompting most banks to lower both fixed deposit and savings account interest rates. Despite this, Slice SFB chose to maintain its deposit rate at par with the repo rate, offering customers an unusually high return compared to competitors.
This strategy helps the bank attract new customers, particularly those who prefer liquidity and flexibility over long-term deposits. It also strengthens the bank’s deposit base, giving it more funds to lend.
Important Note: Rate Varies with Higher Balances
While Slice SFB currently offers the highest rate (5.5%) for savings balances up to ₹1 lakh, the scenario changes when account balances exceed this limit. Several other small finance banks in India offer up to 8% interest on higher-tier savings balances, depending on the amount and tenure. Hence, for customers with larger deposits, exploring multiple options might lead to even better returns.
Bottom Line
If you’re looking for a high-yield savings account, Slice Small Finance Bank currently tops the chart with its 5.5% annual interest rate — significantly higher than major players like SBI, HDFC, and ICICI Bank.
Its technology-first model, efficient operations, and competitive offerings make it an attractive choice for those seeking better returns without compromising on liquidity. However, it’s important to evaluate balance slabs, account conditions, and long-term consistency of rates before making a decision.
For now, Slice SFB stands out as a small but powerful player that’s redefining how savings accounts can deliver meaningful returns in India’s evolving banking landscape.
