Mumbai: Falling interest rates and surplus liquidity are nudging banks to cut deposit rates steeply. Ahead of the central bank's monetary policy next week, the country’s largest lender, State Bank of India (SBI), cut interest rates on retail and bulk deposits. The rate cut will apply across different tenures on retail deposits, of less than Rs 2 crore, and bulk deposits, of Rs 2 crore and above, from August 1.
On longer tenure fixed deposits, the interest rate has been cut by up to 20 basis points (bps) in the retail segment and 35 bps in the bulk segment. Interest rates have been slashed steeply by 50-75 bps for deposits with shorter tenors, i.e. up to 179 days.
Earlier this month, a few banks such as Bank of Baroda, HDFC Bank and Kotak Bank had also revised their fixed deposit rates.
For deposits in the 7 days to 45 days bucket, the new SBI interest rate will be 5 per cent compared to existing rate of 5.75 per cent. On deposits with maturity ranging from 46 days to 179 days, the bank will offer 5.75 per cent compared to existing 6.25 per cent, a reduction of 0.5 per cent.
Similarly, for 180 days to 210 days, the revised rate is 6.25, a cut of 0.10 percent. For deposits of one year to less than two years, the rates have been cut by 0.20 per cent to 6.8 per cent. For five years to up to 10 years, the new rate is 6.5 per cent.
The Reserve Bank of India is widely expected to lower interest rates on August 7 after the Monetary Policy Committee meeting. Since January this year, the central bank has cut the benchmark Repo rate by a total 75 basis points.
