Country’s largest bank State Bank of India (SBI) on Wednesday announced reduction in interest rate on fixed deposits by 0.5 per cent for most of the maturity periods, a move likely to be followed by other lenders.
However, for deposits between 241 days and one year, the downward revision is 1 per cent. The new rate would be 6.5 per cent as against 7.5 per cent. Of the total 9 maturity periods for fixed deposits, 0.5 per cent downward rate revision is for 6 categories.
The new rates would be effective from September 7, SBI said in a statement. With the revision, the interest rate on 7-90 days fixed deposit would come down to 6.50 per cent, from 7 per cent.
Similarly, term deposit 91-179 days would be down by 0.5 per cent, at 6.50 per cent and 180 days fixed deposits would also attract 6.50 per cent interest rate.
Fixed deposit with maturity of 181-240 days would now provide interest rate of 6.50 per cent, down from 7.25 per cent. For one year to less than 2 year maturity period fixed deposits, the new rate will be to 8.5 per cent as against 9 per cent, down by 0.5 per cent. At the same time, interest rate for fixed deposits with maturity period between 2-3 years and 3-5 years has been slashed by 0.5 per cent to 8.5 per cent.
However, the bank has left interest rate unchanged at 8.5 per cent for term deposit of 5-10 years. Besides, SBI has decided to revise interest rates on non- resident fixed deposits for tenors of 1-5 years to 8.5 per cent from existing 9 per cent effective September 7.
Last month, the bank revised interest rates on domestic term deposits of maturity of five years and more by 0.25 per cent to 8.50 per cent. RBI in its quarterly monetary policy review on July 31 reduced Statutory Liquidity Ratio (SLR), the amount of deposits that have to be invested in government bonds and other liquid assets, by 1 per cent.
RBI Governor D Subbarao cut the SLR to 23 per cent, thereby releasing around Rs 68,000 crore of additional liquidity into the system, even as he left all the key interest rates unchanged in the anti-inflationary stance. Soon after the policy review, the bank had cut lending rates on car and home loans by up to 0.5 per cent.