In what would come as a shock to many, the country's largest lender State Bank of India (SBI) has sharply reduced its interest rates on fixed deposits (FDs) across all maturities, ranging from 45 days to ten years.
According to reports, SBI cited surplus liquidity and falling interest rates as the reason behind its latest move.
Here are more details.
Interest rates cut for retail term and bulk term deposits
In a statement on Monday, the bank said that it has slashed interest rates on retail term deposits (less than Rs. 2 crore) and bulk term deposits (Rs. 2 crore & above).
SBI said, "For time deposits with longer tenors, there is a reduction upto 20 bps (basis points) or 0.2% in the Retail segment and 35 bps or 0.35% in the Bulk segment."
Here are the new interest rates, effective from August 1
The reduced rates will be effective from August 1. Here are the rates:
FDs maturing in 7-45 days, interest rates down from 5.75% to 5%.
For 46-179 days: 5.75% (6.25% earlier). For 180-210 days: 6.25% (previously 6.35%).
The FD interest rates offered to senior citizens will be 0.5% above the rate payable for all tenors. For SBI Staff and SBI pensioners, the interest rates will be 1% above the applicable rate. For further details on bank's revised interest rates, click here: https://bit.ly/1riAsxA.
SBI's FD interest rates were last revised on May 9
Notably, SBI had last revised its fixed deposit interest rates on May 9 this year.
SBI's interest rate cut comes days before the bi-monthly review of the Reserve Bank of India's Monetary Policy Committee.
Reportedly, the central bank is expected to lower interest rates in the policy meeting next month.
This year, RBI had slashed the repo rate by a combined 75 basis points.
Other banks have also cut FD interest rates
Not just SBI, many other banks have cut their interest rates on fixed deposits given the fall in interest rates in the financial system and surplus liquidity. These banks include HDFC Bank, Axis Bank, PNB, BoB, and Kotak Mahindra, among others.