State Bank of India (SBI) on August 23 said it will not reduce the savings bank (SB) interest rate further and hold the same at the existing level of 3 percent for customers with balances above Rs 1 lakh.
Customers with savings balance up to Rs 1 lakh will continue to get the rate of interest at 3.50 percent, the bank further said.
The Public lender in a media release said it has decided to maintain the status quo to protect the interest of Savings bank depositors.
On the other hand, on account of falling interest rates and surplus liquidity, SBI has realigned its interest rate on term deposits with effect from August 26.
"The bank has slashed retail term deposit rates by 10-50 bps across tenors as well as bulk term deposit rates by 30-70 bps across tenors," the press release said.
RBI in its third bi-monthly policy had reduced repo rate by 35 bps (from 5.75 percent to 5.40 percent) with effect from August 7, 2019. Had this rate cut been transmitted to savings bank deposits, the applicable returns on SB deposits with balances above Rs 1 lakh would have dropped to 2.65 percent (275 bps below Repo rate, i.e. 5.40 percent) with effect from September 1, 2019.
With effect from May 1, 2019, SBI had linked the interest rate on Savings Bank deposits (for balances above Rs 1 lakh) with the repo rate (i.e. 275 bps below repo rate) without changing the rate of 3.50 percent for SB balances up to Rs 1 lakh.
State Bank of India, the largest commercial bank in terms of assets, deposits, branches, customers and employees, is also the largest mortgage lender in the country. As on June 30, 2019, the bank has a deposit base of over Rs 28 lakh crore with CASA ratio of 45.1 percent and advances of over Rs 19 lakh crore.
The bank claims to commands around 35 percent and 36 percent of market share in home loans and auto loans, respectively.
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