Mumbai, July 15: The State Bank of India today reduced the interest rate on select term deposits by up to 50 basis points.
Sources in the countryís largest lender said there were no plans to slash the lending rates. The SBIís move is expected to be followed by others.
The bank brought down the interest rate on fixed deposits of between 7 days and 179 days to 7 per cent from 7.5 per cent. It added that the new rate would be effective from July 18.
Indiaís top lender also made certain bulk deposits cheaper. In case of deposits above Rs 1 crore, interest rates have been lowered in two maturity buckets.
The interest rate on term deposits between 7 days and 60 days have been reduced by 25 basis points to 6.25 per cent. For deposits of 61 days to less than one year, it has been lowered to 6.75 per cent from 7 per cent.
Last month, the RBI had left its key policy rate unchanged in a bid to rein in inflation. The repo rate at which the RBI lends to banks was retained at 8 per cent. The cash reserve ratio was kept unchanged at 4 per cent.
The SBI had last reduced its fixed deposit rates in February by up to 50 basis points on select maturities.
Deposit rate for maturities of 3-5 years was cut by 0.25 per cent, while those for five years and above was cut by 0.50 per cent.
The latest round of rate reduction comes a day after both wholesale and retail inflation fell in June. Retail inflation touched its lowest mark at 7.31 per cent since January 2012, while the wholesale price-based index slid to a four-month low of 5.43 per cent.
The downward trend in inflation has fuelled hopes that the RBI may reduce interest rates sooner.
Sale of NPAs
The SBI sold non-performing assets worth Rs 3,590 crore to various asset reconstruction companies in 2013-14, the Rajya Sabha was informed today.