India's largest lender, State Bank of India (SBI) slashes its interest rate of term deposits for the third time in just 40 days. The bank has again announced up to 50 basis points reduction in its deposit rates across various maturities.
Earlier this month also, SBI had cut the term deposit rates by 25 basis points on all its tenures. Following this reduction, a six month deposit of 91 days to 180 days will yield an interest rate of 5.5% against 6%.
Term deposits with maturity of one year to less than two years will earn a rate of 6.5% against the earlier rate of 6.75%. 1000 day deposit will carry an interest rate of 7.75% against 8% while two years to less than 1,000 days deposit will offer 7.5% interest against 7.75%.
Further the interest rate on deposits ranging from three years to less than five years has also been brought down to7.5% from 7.75%.
The revised rates of the bank are effective from Monday, May 18th.
Over the past fiscal, the bank had aggressively offered deposit rates above the rates offered by its peers and this is the reason that there was scope to cut them. The above-market rate helped bank to mobilize funds through which it could increase its lending. The last quarter of the previous fiscal witnessed 30% growth in the loan book of SBI.
Although SBI has announced the third cut in just a short gap, its rate is still higher than its peers under some buckets. For instance the maturity bucket of 181 days to one year rate is about 100 basis points higher than PNB's deposit with the same tenure. But in others like 1000-day product SBI is behind Union Bank of India that is paying 8%.