SBI slashes interest rate on term deposits

Business

oi-Roshni

By Roshni Agarwal

Published: Monday, February 17, 2014, 14:04 [IST]

After reporting dismal Q3 results with higher NPA (non-performing assets) and lowered net profits, the public-sector lender announced reduction in the interest rate on term deposits with effect from February 18, 2014. The rate cut has been made across different maturity terms and deposit size.

For retail term deposits for less than Rs. 1 crore and with a maturity term between three and five years, the rate has been revised downwards by 25 basis points to 8.75% from 9%. And for deposits with a maturity of over 5 years, interest rate shall now stand at 8.5% revised by 0.5%.

In the bulk-deposits category with deposit amount over Rs. 1 crore and a maturity term of 61-days to a a year, the interest rate has been lowered to 7% ( a reduction of 75 basis points). One basis point or 1 bps is one-hundred of a percentage point.

Earlier in its monetary policy review for the third quarter, the Reserve Bank of India increased the repo rate ( the rate at which commercial and other banks in India borrow money from RBI). The change in repo rate biased towards the higher side to tame inflation is driving banks to increase the cost of borrowing for its customers and with it both retail and corporate investor classes are likely to be affected.

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