SBI reduces interest rate on deposits
The State Bank of India (SBI) has slashed deposit rates across all maturities with effect from August 1, citing surplus liquidity and falling interest rate scenario.
State Bank's revised rates
In a statement, SBI said that interest rates have been reduced by 50-75 basis points (bps) for time deposits with shorter tenor of up to 179 days.
Revised interest rates on short-term deposits
Annual rates on short-term deposits (for 7-45 days) of less than Rs 2 crore have been reduced to 5 per cent from 5.75 per cent.
(Check table for other tenors)
Revised rates on deposits of Rs 2 crore and above
For time deposits with longer tenors of 180 days up to 10 years, there is a reduction of up to 20 bps for individual retailer consumers and by up to 35 bps on bulk deposits of Rs 2 crore and above.
(Check table for other tenors)
What SBI officials said
SBI officials said that the bank was comfortable in terms of liquidity and was raising enough to meet credit demand.
SBI's deposit rates are the lowest
Traditionally, SBI’s deposit rates have been the lowest among all banks and it sets the floor for FD rates across the banking system.
Lending rates may reduce
The deposit rate cut may translate into lower lending rates in the coming weeks as the benchmark for loans is calculated based on the cost of funds.
SBI controls more than a fourth of retail banking activity
SBI, which has the largest branch network at 22,010, controls more than a fourth of retail banking activity in India.
Bank of Baroda's deposit rate cut
Last week, Bank of Baroda had cut its FD rates and had also brought down its savings account rates by 25 bps to 3.25%.
Rate cut by other banks
With this reduction, most private and public sector banks are expected to announce cuts in deposit rates.
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