India’s largest lender State Bank of India has reduced its savings deposit interest rate by 5 basis points (bps) to 2.7%, according to the bank’s website.
The cut has been effective for all deposits from 31 May and is the second reduction in savings deposit rates in FY21 after the last reduction of 25 bps in April. On 11 March, the bank had lowered its savings bank interest rate to 3% for all customers. Before the cut in March, it used to pay 3.25% on balances of up to ₹1 lakh and 3% on balances above ₹1 lakh.
Flush with liquidity and lack of credit growth, most lenders have resorted to lowering deposit rates.
On 27 May, SBI had lowered its fixed deposits rates by up to 40 bps. It was the bank’s second deposit rate cut in May, with the last one on 12 May. Retail depositors now earn an interest of 5.1% on their 1-2-year term deposits of below ₹2 crores, down from 5.5% earlier. After RBI lowered its repo rate by 40 basis points (bps) on 22 May, SBI chairman Rajnish Kumar said the bank will convene a meeting of its asset-liability committee (ALCO), the panel that deliberates on interest rate changes.
For deposits of ₹2 crores and more, the rates have come down between 10-50 bps between 25 April and 27 May, the bank’s website showed.
Other banks that have cut savings account rates
ICICI Bank: In a regulatory filing on June 2, ICICI Bank said it has cut the interest rates on saving deposits by 25 basis points (bps). The new rates will come into effect from June 4.
The private sector lender has cut the interest rates on all deposits of less than Rs 50 lakh to 3 percent, a reduction of by 25 bps as against the existing 3.25 percent.
Likewise, for deposits of Rs 50 lakh and above, the account holders will earn an interest of 3.50 percent, down from 3.75 percent currently.
Axis Bank: On June 1, Axis Bank slashed interest rate on savings account by 25 basis points (bps). The interest on savings account for balance up to Rs 50 lakh has been lowered to 3.5 percent. For balance above Rs 50 lakh, the interest rate stands at 3.5 percent.
Also Read: SBI customers get relief on loan accounts; moratorium extended by another 3 months
