As a result of these changes, the Nifty Bank index rose by 2 percent, with private banks like HDFC Bank and ICICI Bank performing particularly well.

In a bid to stimulate growth and control inflation, the Reserve Bank of India (RBI) recently cut the key policy rate by 25 basis points to 6 percent.

Other banks, including Axis Bank and State Bank of India, have also adjusted their rates, with SBI currently offering 2.7% for savings deposits under Rs 10 crore.

Notable lenders, including HDFC Bank, YES Bank, and State Bank of India, responded by lowering their lending rates by 5-25 basis points, while also reducing fixed deposit rates across various tenures.

This decision prompted a significant rally in banking stocks on April 15, 2025, with the Bank Nifty index rising by 2.6% as major lenders announced substantial deposit rate cuts.

The RBI's decision was influenced by inflation levels that were below target, indicating confidence in achieving a 4 percent target over the next 12 months.

HDFC Bank, for instance, reduced its savings interest rate by 25 basis points to 2.75% for deposits under Rs 50 lakh, marking its first cut in five years.

IndusInd Bank led the gains with a 6.8% increase, followed closely by Axis Bank at 3.9% and HDFC Bank at 3.4%, boosting overall investor confidence.

Looking ahead, Goldman Sachs predicts that credit costs will decline as slippages are expected to moderate starting in the second half of FY26.

Despite potential challenges in the first half of FY26, Goldman Sachs remains optimistic about the Indian banking sector, suggesting an improvement in asset quality and operating profitability.

Overall, the reduction in repo rates is expected to enhance market liquidity by enabling banks to decrease both deposit and lending rates.

Analysts anticipate that more banks will lower their savings deposit rates in the upcoming quarters, which will further enhance profit margins for banks.