Mumbai, Jan. 9: The State Bank of India (SBI) today brought down interest rates on longer-end domestic term deposits by 25 basis points. The revision is in consonance with lower yields prevailing on government securities and mirrors the action adopted by several other nationalised banks over the past few days.
The bank today said interest rates on deposits with maturities of a year to less than two years will be at 5.75 per cent against the earlier 6 per cent. Similarly, interest rates for deposits between two years and less than three years have been brought down to 6 per cent from 6.25 per cent and three years and above now carry an interest rate of 6.25 per cent against the earlier 6.50 per cent.
While the changes will be effective from January 13, SBI added that interest rates payable on term deposits with maturities of seven days to 14 days, 15 days to 45 days, 46 days to 179 days, 180 days to less than a year would remain unchanged. Interest rates payable on deposits of maturities of a year and above to senior citizens would carry a differential rate of 50 basis points over and above the applicable term deposits.
The country’s largest bank also left rates of interest payable on NRE deposits unchanged. Falling yields on government securities has prompted many banks led by Bank of Baroda (BoB) to lower their deposit rates. Yields on the benchmark 10-year government security, which had plummeted to a record low of 5.98 per cent, are now hovering between 6-6.2 per cent.
On January 6, SBI chairman A. K. Purwar said the bank was considering a reduction in deposit rates as government bond yields have fallen while fixed deposit rates remained static.
This is the third reduction announced by SBI since the October 29 monetary and credit policy. In late November last year, the bank brought down interest on deposits with a duration of two years to less than three years to 6.25 per cent from 6.75 per cent, while the rate of interest on deposits of three years and above were brought down from 7 per cent earlier.
Though bank officials were not available for comment on the latest round of rate cuts, the bank is likely to maintain the current rates for some time. Analysts added that SBI plans to book profits in its mammoth government securities portfolio of around Rs 1,40,000 crore.