India's largest commercial lender State Bank of India announced yet another reduction in lending rates on Monday. The lending rates were cut by 10 basis points across tenors. The new rates will be effective from Tuesday. This is the third rate reduction announced by SBI in the current fiscal year. The bank slashed retail term deposit rates by 20-25 bps and bulk term deposit rate by 10-20 bps across tenors. One year MCLR has also been reduced to 8.15 per cent from 8.25 per cent, due to the rate cuts.
SBI said the decision to reduce deposit rates were taken due to "falling interest rate scenario and surplus liquidity." "In view of the falling interest rate scenario and surplus liquidity, SBI also realigns its interest rate on term deposits (TD) w.e.f. September 10. Bank slashes retail TD rates by 20-25 bps and bulk TD rates by 10-20 bps across tenors," SBI said.
FD rate for 180 days to 210 days has been reduced from 6 per cent to 5.80 per cent, while rate for 2 years to less than 3 years has been cut from 6.50 per cent to 6.25 per cent. When it comes to senior citizens, FD rates for 180 days to 210 days have been cut from 6.50 per cent to 6.30 per cent, while it has been cut to 6.75 per cent from 7.00 per cent for tenor 2 years to less than 3 years.
One year MCLR has been cut from 8.25 per cent to 8.15 per cent, while it has been reduced 10 bps to 8.25 per cent and 8.35 per cent for two years and three years respectively.
The rate cuts come for the second time following Reserve Bank of India's policy in August. RBI has cut repo rate by a total 110 bps this calendar year. Banks are yet to pass on the benefits with such intensity.
Not just SBI, other banks have been reducing rates as well including Central Bank of India, Axis Bank, Oriental Bank of Commerce, IDBI Bank and IDFC First Bank.