Mumbai, Feb. 27: The State Bank of India (SBI) today raised deposit rates by 25 basis points for tenures above one year.
The country’s largest bank, however, slashed premium paid to senior citizens by a quarter of a percentage point.
The bank will pay an interest of 8.75 per cent on deposits (below Rs 15 lakh) in the maturity period of 1 to less than 2 years. Similarly, term deposits of 2-3 years, 3-5 years and 5-10 years would earn a higher interest rate of 8.75 per cent.
The SBI also raised interest rates on deposits of Rs 15 lakhs to less than Rs 1 crore by the same margin for maturities of over one year.
For senior citizens, the SBI reset its premium pay to 25 basis points per annum.
The reduction comes at a time the finance ministry has reportedly asked banks to bring down the differential rate of interest paid to senior depositors.
The rate revisions will come into effect from March 1.
Analysts said the hike in the rates was meant to enable deposits keep pace with credit.
Recent statistics released by the central bank have shown deposit growth at 13 per cent, lower than that of advances which have been growing over 16 per cent.
Banks have said that one of the reasons behind the muted growth in deposits is the competition generated from similar instruments.
Lenders are hoping that finance minister P. Chidambaram will announce some measures in the budget to make bank deposits more attractive.