State Bank of India (SBI), the country’s largest lender, will reduce the interest rates on deposits in retail savings accounts from November 1, 2019. In a statement last week, the bank said that “in view of the adequate liquidity in the system”, interest rates on savings accounts with balances up to Rs. 1 lakh would be lowered by 25 basis points (bps) or 0.25 percentage points. The cut in SBI interest rate follows reduction in the repo rate – the key interest rate at which it lends short-term funds to commercial banks – by the Reserve Bank of India (RBI).
On savings deposits, SBI has announced a revision from 3.50 per cent to 3.25 per cent on balances up to Rs. 1 lakh from November 1, 2019, according to its statement. The interest rates on savings account deposits above Rs. 1 lakh has been kept unchanged.
Earlier this month, the RBI lowered the repo rate by 0.25 percentage point to 5.15 per cent, marking the fifth straight bi-monthly reduction in the key interest rate so far this year. The RBI has cumulatively lowered the interest rate by 135 basis points this year.
In May this year, SBI had linked its large savings deposits rates to the RBI’s repo rate, offering an interest rate of 275 basis points lower the repo rate on savings account deposits with balance of over Rs. 1 lakh.