|State Bank of India has announced reducing interest rates on fixed deposits of 5 years and above. The bank has brought down the interest rates on these deposits to 8.5%. At present term deposits of upto Rs. 15 lakh for 5 years and above offer 8.75%; while deposits of Rs. 15 lakh upto Rs. 1 crore for same tenor offer 9%.
Bank has also reduced the interest rate on home loans and car loans by 60 basis points and 50 basis points respectively. This has come as no surprise, since it was much expected after the RBI reduced the statutory liquidity ratio (SLR) by 1%.
SLR cut would create an industry wide liquidity of Rs. 62,000 crore, of which the bank would raise about Rs. 10,000 crore. Bank's Dy. MD, Atanu Sen maintained the reduced rates would not affect the bank's liquidity, because the bank has enough liquidity. Sen further added that reduction in loan rates is expected to grow credit by 10%.
The largest bank in the country is also hoping for government to implement the Guarantee Scheme for education loans, which will enable it to reduce rates on education loan as well. Bank Dy. MD, Pradeep Kumar stated, "To transmit the RBI's expectations that the policy would give a stimulus to credit growth for productive purposes, we decided to reduce the interest rates on home and car loans."