For saving deposits upto Rs. 1crore or less, the state-run lender has reduced its interest rates by 50 basis points to 3.5%. Nonetheless for deposits over Rs. 1 crore, the bank will continue to offer 4% interest rate p.a.
The new rate is in line with the bank's move to roll-out two-tier of savings bank rate with effect from July 31, 2017. In a notice to the exchanges bank said, "The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on savings bank deposits".
RBI deregulated interest rate on savings account in 2011 and since then SBI is the first bank to bring about a reduction in interest rate on savings rate.
The reduction in interest rate should have a direct bearing on the lending rate, nonetheless the bank made a clarification citing the fact that it reduced its MCLR or marginal cost of lending rate in January this year by 90 basis points. The move was effected after a high surge in inflow in current and saving account in the wake of demonetization.
In its notice to the exchanges, bank added "The revision in savings bank rate would enable the bank to maintain MCLR at the existing rates, benefitting a large segment of retail borrowers in SME, agriculture and affordable housing segments".