Business Economy

SBI cuts FD interest rate, lowers rates on non-repo-linked loans

Citing adequate liquidity in the banking system, the State Bank of India (SBI) has decided to cut deposit and lending rates.

The country’s largest lender reduced the savings account interest rate by 25 basis points (bps) to 3.25% for deposits of up to ₹1 lakh, effective November 1.

“In view of the adequate liquidity in the system, State Bank of India announced revision in interest rate on Savings Bank Deposits (with balances up to ₹1.0 lakh) from 3.5% to 3.25% w.e.f. November 1,” the bank said in a statement.

It also cut the retail term deposit rate by 10 bps and corporate bulk deposit rates by 30 bps. The new rates will be effective from October 10. 

With this reduction, SBI’s peak retail deposit fixed rate will be 6.4% for deposits made for a period of 1 year to less than 2 years. 

The MCLR (marginal cost of funds based lending rate) was also cut by 10 bps from October 10. The one-year MCLR — to which most loans are linked — will be 8.05%.

The interest rate reductions come after the Reserve Bank of India (RBI) cut the benchmark repo rate by 25 bps last week. Since banks’ retail lending and loans to MSME borrowers are now linked to the repo rate, all these interest rates have also had to come down by 25 bps after the RBI’s rate cut.

 A reduction in deposit rates helps banks to retain their net interest margins. A 100 basis points make 1 percentage point.

Source: thehindu.com

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