Mumbai, June 30: In a surprise move, the State Bank of India (SBI) today raised interest rates by 25 basis points for deposits under Rs 15 lakh in the three to five year tenor.
The country’s largest bank said deposits in this maturity bucket would earn 9 per cent against 8.75 per cent at present. Deposits between Rs 15 lakh and Rs 1 crore in the 3-5 year bucket already earn 9 per cent interest.
The revised interest rate applicable for deposits below Rs 1 crore will be effective from July 1. However, interest rates on other maturity buckets have been left unchanged.
The hike was unexpected as the bank had brought down deposit rates twice in April. It had first cut deposit rates by 25-100 basis points after the RBI’s annual monetary policy in April.
The bank had then brought down interest rates on fixed deposits with maturity between 7-179 days by 75 basis points to 7.25 per cent and for term deposits with maturity between 181 days to less than 1 year to 7.50 per cent from 8 per cent.
Interest on retail term deposits between 1-3 years maturity was also reduced by 25 basis points to 9 per cent.
Earlier this month, the SBI lowered retail term deposit rates by 0.25 percentage point in tenors up to 240 days with effect from June 8. Similarly, deposits between 7-90, 91-179 and 180 days were brought down to 7 per cent.
Observers said the upward revision in the three to five year tenor might have been done to fine-tune its liability profile. However, the change will not lead to any major change in the bank’s margins as the SBI has a high ratio of current and savings account deposits.
The Bank of Baroda (BoB) and Punjab National Bank now offer interest rates of 8.50 per cent and 8.75 per cent, respectively, in the same maturity bucket.
This revision comes after the Reserve Bank of India left its policy rate unchanged in the recent mid-term review of the monetary policy.
The SBI has also left its base rate unchanged at 10 per cent. Base rate is the minimum rate that banks must charge their customers.
It had reduced lending rates to a certain category of borrowers such as exporters, agriculture and corporate houses by bringing down the spread over the benchmark rate.