State Bank of India cut the savings bank deposits rate by 0.5 per cent to 3.5% for deposits below Rs 1 crore.
State Bank of India’s savings bank deposit rate was steady at 4 per cent for six years. With effect from 31 July 2017, a savings bank balance of over Rs 1 crore will earn an interest rate of 4% per annum (p.a.), while the ones with Rs 1 crore or less will earn an interest rate of Rs 3.5% p.a.
“The decline in the rate of inflation, high real interest rates and the expected softening of interest rates are the other considerations warranting a revision in the rate of interest on savings bank,” it said. Revision of saving bank rate will enable the bank to maintain marginal cost of fund based lending rate (MCLR) at existing rates.
The move comes two days ahead of the Reserve Bank of India’s announcement of its monetary policy review on August 2. It is widely expected that the monetary policy committee will recommend a 25bps cut in key interest rates.
This cut in savings bank rate will prompt many banks to follow suit.