SBI or State Bank of India, the country largest lender, will reduce interest rate on fixed deposits across all maturities starting August 1. In view of the falling interest rate scenario and surplus liquidity, SBI will cut interest rate on retail term deposits (less than Rs. 2 crore) and bulk term deposits (Rs. 2 crore & above), the bank said in a statement on Monday. "For time deposits with longer tenors, there is a reduction up to 20 bps (basis points) or 0.2 per cent in the Retail segment and 35 bps or 0.35 per cent in the Bulk segment," said SBI.
SBI made the largest cuts on shorter-term deposits. Annual rates for 7-45 days are being reduced to 5 per cent from 5.75 per cent while for 46 days to 179 days, the rate is getting cut to 5.75 per cent from 6.25 per cent.
The government has already reduced interest rates on small savings schemes such as the National Savings Scheme, Public Provident Fund among others in late June by 10 bps.
The announcement comes a week ahead of the bi-monthly review of the Reserve Bank of India's Monetary Policy Committee (MPC). RBI had lowered the key lending rate or repo rate by 25 basis points to 5.75 per cent in June.
Currently, in 7-45 days fixed deposit (FD) tenor, SBI pays an interest rate of 5.75 per cent to general public and 6.25 per cent to senior citizens. In its longest tenor of 5-10 years, the bank pays an interest rate of 6.60 per cent and 7.10 per cent to general public and senior citizens respectively.
SBI had last revised it fixed deposit interest rates on May 9.
Earlier this month, SBI reduced its benchmark lending rates by five basis points across all tenors. The marginal cost of fund-based lending rate, or the MCLR, stood at 8.40 per cent for the one-year tenor after the revision.
(With inputs from Reuters)
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