SBI sharply cuts interest rates on fixed deposits
29 July 2019
State Bank of India (SBI), the country's largest lender, has announced a sharp reduction in its fixed deposit (FD) rates across all tenors - ranging from 45 days to ten years – signaling a move towards a low interest rate regime.
On FDs maturing in seven days to 45 days, SBI has reduced the rate of interest from 5.75 per cent to 5. 00 per cent. On deposits maturing in 46 days to 179 days, the rate has been reduced from 6.25 per cent to 5.75 per cent. For deposits maturing in 180 days to 210 days, SBI has cut the interest rate by 10 basis points to 6.25 per cent from 6.35 per cent.
For short-term deposits having maturity ranging from 211 days to less than one year, SBI has slashed the interest rate to 6.25 per cent from 6.40 per cent.
The revised rates will be applicable on term deposits of all tenors with effect from 1 August 2019, SBI stated on its website.
On medium-term deposits of maturity ranging from one year to less than two years, SBI has reduced the interest rates by 20 basis points to 6.80 per cent from 7.00 per cent at present.
For longer term deposits maturing in two years to less than three years, the bank has slashed interest rate by 5 basis points to 6.70 per cent from 6.75 per cent.
For FDs maturing in three years to less than five years, SBI will offer an interest rate of 6.60 per cent, 10 basis points lower than existing rate of 6.70 per cent. For deposits maturing in five years to ten years, SBI has reduced the interest rate to 6.50 per cen5t from 6.60 per cent at present.
SBI had earlier tweaked interest rate on some select maturities effective 9 May 2019.
Banks have been reducing interest rates on fixed deposits due to a fall in lending rates after the Reserve bank thrice reduced its policy rate. Several banks, including HDFC Bank, Axis Bank, PNB, BoB, and Kotak Mahindra, among others, revised their fixed deposit rates this month.
SBI's interest rate cut comes days ahead of RBI’s monetary policy revision. The central bank is widely expected to lower interest rates in next month's policy meeting. The RBI so far this year cut the repo rate by a combined 75 basis points, leading to a sharp fall in bond yields.
Simultaneously, the government had also cut interest rates on small savings instruments, including PPF for the July-September quarter.