The cut has been effective for all deposits from 31 May and is the second reduction in savings deposit rates in FY21 after the last reduction of 25 bps in April. On 11 March, the bank had lowered its savings bank interest rate to 3% for all customers. Before the cut in March, it used to pay 3.25% on balances of up to ₹1 lakh and 3% on balances above ₹1 lakh.
Flush with liquidity and lack of credit growth, most lenders have resorted to lower deposit rates.
On 27 May, SBI had lowered its fixed deposits rates by up to 40 bps. It was the bank’s second deposit rate cut in May, with the last one on 12 May. Retail depositors now earn an interest of 5.1% on their 1-2-year term deposits of below ₹2 crore, down from 5.5% earlier. After RBI lowered its repo rate by 40 basis points (bps) on 22 May, SBI chairman Rajnish Kumar said the bank will convene a meeting of its asset liability committee (ALCO), the panel that deliberates on interest rate changes.
For deposits of ₹2 crore and more, the rates have come down between 10-50 bps between 25 April and 27 May, the bank’s website showed.