State Bank of India, country’s largest public sector bank has announced rate cuts for its savings account customers. The bank earlier used to pay 4% interest rate to the customer having less than INR 1 crores in the bank account, the same rate has been now decreased to 3.5%.
The bank announced this move on Monday in a regulatory filing made to the stock market. According to the filing statement, the inflation has been on a decline since last few months and the real interest rate has gone up. All these factors prompted SBI to take a call on revising the interest rate. Currently, over 90% of SBI customers maintain an average balance of less than 1 crore and all of them are set to get affected by the announcement.
This announcement starts the beginning of a two-tier interest rate payment system, as the bank will be paying 3.5% to the account holders having a balance below INR 1 crore and will continue to pay 4% to the customers having a balance of over INR 1 crore. According to analysts and experts aware of the development, the move by SBI will turn out to be a positive move as this will help the premier bank in increasing its revenue.
SBI has always taken the initiative to start the rate cuts. With today’s announcement, the analysts believe that other banks will also follow the same and more announcement on an interest-rate cut will be made in the coming days.
SBI currently enjoys the market leading position in terms of customers and the funds deposited. This move is surely slated to bring in a lot more revenue and profit for the bank. SBI shares shot up after today’s announcement and ended the day at INR 312.80 with a positive difference of over 4.5%.