State Bank slashes its deposit rates by up to 50 basis points

The State Bank of India has cut interest rates on term deposits by up to 50 basis points. The revision came into effect from April 29. The new rates will apply only to fresh deposits and existing deposits on renewal.

Deposits of two-to-three years’ maturity will now generate a return of 6.25 per cent annually as against 6.75 per cent earlier.

The bank also announced a reduction in its deposits with a maturity of over three years to 6.25 per cent from 6.5 per cent. The highest return offered by the bank for general investors is now in the one-year to 455 days category where it offers 6.9 per cent.

SBI has, however, decided to maintain interest rates for senior citizens on most maturities, including the one-year to the 455-day segment where they will continue to get 7.4 per cent—the highest return available earlier. In the two-to-three year segment rates have been reduced for senior citizens by 50 basis points. In deposits above three years, senior citizens will get 25 basis points lower than before.

The bank has also not changed its key lending rates. Its one-year marginal cost of lending rate (MCLR) stands at 8.00 per cent. Most borrowers have their home loans linked to the one-year MCLR. Given that MCLR is linked by a formula to cost of funds it is likely that the benchmark rate too will decline as deposits mature.