India's largest lender and public sector bank State Bank of India (SBI) announced on Friday that interest rate on fixed deposits will see a revision once again across all tenors, making it the second rate cut on FD rates in less than a month's period. The revised rates will come into effect from 26 August.
SBI has cut FD rates by 10-50 bps across tenures for retail customers and by 30 bps-70 bps across tenures for bulk depositors. SBI had earlier revised FD rates from 1 August. "In view of the falling interest rate scenario and surplus liquidity, SBI realigns its interest rate on Term Deposits w.e.f. 26th August 2019," SBI press release stated.
The revised rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits. Premature penalty for Bulk Term Deposits for all tenors will be 1%. The interest rate payable to SBI Staff and SBI pensioners will be 1.00% above the applicable rate.
As per the recent notification by SBI in its corporate website, the rate applicable to all Senior Citizens and SBI Pensioners of age 60 years and above will be 0.50% above the rate payable for all tenors to resident Indian senior citizens i.e. SBI resident Indian Senior Citizen Pensioners will get both the benefits of Staff (1%) and resident Indian Senior Citizens (0.50%).
SBI mentioned that it will not reduce the interest rate charged on its savings accounts and hold the same at the existing level as earlier.
The Reserve Bank of India (RBI) had reduced repo rate by 25 basis points to 6% from 6.25% in its first bi-monthly meet concluded on April 18, 2019. This was further reduced another 25 basis points to 5.75% from 6.0% by the second bi-monthly meet on 20 June 2019 and by another 35 basis points (bps) from 5.75% to 5.40% in the third meet concluded on 21 August 2019.
The overall repo rate cut passed on to the banks by the RBI thus amounts to 85 bps. Earlier this week, RBI chief Shaktikanta Das had also urged banks to pass on the central bank's rate cuts to borrowers.