SBI revises returns on recurring deposits; check out latest interest rates
BusinessToday.In August 27, 2019
The State Bank of India, the country's largest lender, has reduced the interest rates on its retail term deposits, or those of amounts under Rs 2 crore, as well as bulk deposits on all the tenures offered with effect from August 26. Retail deposits will now earn up to 50 basis points (bps) less than just less than a month ago. This means that the interest rate offered on recurring deposits has also come down.
A recurring deposit can be a simple and easy option to help you save up for short- and mid-term goals. In such accounts you typically put in a fixed sum every month for specified length of time - ranging from 12 months to up to 10 years - and bag a much more attractive interest rate compared to your savings account. It's a good way for novices to inculcate an investing habit.
SBI's one-year recurring deposit will now earn 6.7 per cent interest, down from 6.8 per cent since August 1. The rate for recurring deposits maturing in 24-35 months is now 20 bps lower at 6.5 per cent, while those for three to five year terms will earn 6.25 per cent, or 35 bps lower than the previous rate. The longer-term recurring deposits also earn 6.25 per cent. Keep in mind that senior citizens earn 0.5 per cent higher interest across all tenures.
The minimum monthly deposit amount for opening a recurring deposit with SBI is Rs 100, and in multiples of Rs 10 thereon with no maximum ceiling. Penalty is imposed for missed installments. In case six consecutive installments are not received, the account will be prematurely closed and the balance will be paid to the account holder. SBI does not send reminders to pay due installments.
The interest rates on bulk deposits, that is amounts of over Rs 2 crore, at SBI have also been revised downwards with effect from Monday. Interestingly, such deposits used to earn a marginally higher interest rate than retail deposits for the longer maturity periods, but now they are earning up to 35 bps less.
This development comes in the wake of the 35 bps reduction in the repo rate announced by the monetary policy committee (MPC) earlier this month - the fourth straight rate cut - and surplus liquidity in the system.