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New interest rate for SBI Savings Accounts becomes effective starting today

After the minutes of the RBI’s MPC meeting revealed that the repo rate was slashed by 75 basis points, banking institutions, all across India, have started cutting Interest rates on savings and fixed deposit accounts. State Bank of India, the leading creditor in India, is no exception. The return from a savings deposit account in SBI has decreased by 25 basis points, making the current rate, 2.75%.

SBI also announced that fixed deposits, maturing between 7 days to 45 days, will offer an interest rate of 4% as against 4.5% earlier. Interest rates on fixed deposits, maturing in a year and above, have been reduced by 10 basis points, from 6% down to 5.9%. The bank has also reduced interest rates on bulk term deposits (Rs 2 crore and above) by 15 basis points for 180 days and above tenors.

Earlier, in March, SBI had lowered its savings account interest rates, down to 3%, for all, from 3.25 on balances of up to ₹1 lakh, and 3% on above ₹1 lakh.

The bank waived off the average monthly balance requirements for all 44.51 crore savings account and cancelled SMS charges, as well.

SBI had also cut the marginal cost of funds-based lending rate (MCLR) across all tenors by 35 basis points making home and other retail loans cheaper. Consequently, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by around Rs 24.00 per 1 lakh on a 30-year loan. Most of the consumer loans are priced with the one-year tenor as the benchmark.

The one-year MCLR is now at 7.40%, effective April 10th. This cut, down from 7.75%, makes it the 11th consecutive MCLR cut that SBI has introduced in or after FY19.

Some of these SBI announcements follow ICICI Bank’s suit as interests on ICICI saving accounts have been slashed by 25 basis points, effective April 9th. These announcements are making the real returns on savings account balances with all leading banks hit the negative mark as retail inflation or the Consumer Price Index (CPI) hit 5.91% in March.

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Saunak Chowdhury

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