SBI hikes interest rates on term deposits above Rs 1 crore by 50-140 bps   New Delhi     Last Updated: February 11, 2018  | 15:46 IST
SBI hikes interest rates on term deposits above Rs 1 crore by 50-140 bps

The State Bank of India had hiked interest rates on domestic bulk term deposits by as much as 140 basis points. This is the second hike in interest rates on bulk term deposits by SBI in a time span of two months. It comes around the time when government has announced to inject Rs 88,139 crore in public sector banks by March.

With the new rates into effect, bulk term deposits for a tenor of 7 to 45 days have been increased by 50 basis points to 5.25 per cent per annum from 4.75. Deposits that mature between 46 days and two years will yield interest of 6.25 per cent every year. Those with a maturity period of two to ten years will have 6.00 per cent interest rate per annum.

The rate of interest paid to senior citizens on term deposits of Rs 1 crore or more has also been increased. For 7 to 45 days, they will be paid 5.75 per cent interest per annum, 6.75 for 46 days to two years, and 6.50 for two to ten years. With this hike, now bulk deposits with SBI will offer as much interest rate as the retail term deposits. Interest rates on retail term deposits have been kept unchanged.

The increase in bulk term deposits interest rates is a realignment of rates as the competing banks were offering better interest rates on term deposits, PK Gupta, Managing Director, SBI was quoted by Business Standard. The hike will not have any significant impact on SBI's cost of funds as the portion of bulk deposits against total deposits with the bank is quite small, Gupta added.

The SBI had increased interest rates on deposits between Rs 1 crore and Rs 10 crore by 100 basis points back in November last year. This move came on the heels of 25 basis points reduction in interest rates on deposits under Rs 1 crore. These recent tweaks in interest rates are reflections of tightening liquidity as they bridge the gap between retail and bulk term deposits.

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