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SBI reduces rates on FD by 25-50 bps
By siliconindia
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Tuesday, 28 July 2009, 19:16 IST |
3 Comments
Bangalore: State Bank of India (SBI) reduced interest rates on fixed deposits (FD) by 25-50 basis points. Following the rate cut, the bank offers 7.25 percent on its 1000-day special deposits scheme against 7.50 percent earlier.
SBI's new rates came into effect from July 27. The reduced rates will be applicable on all fresh deposits and renewals. With this rate revision, the highest rate offered by the bank for its deposit products will be 7.75 percent on deposits with a tenure of 8 to 10 years. Deposits ranging from six months to one year maturity will now yield six percent against an earlier 6.5 percent, while deposits maturing from 5-8 years will now earn an interest of 7.5 percent from an earlier 7.75 percent. OP Bhatt, Chairman, SBI said, "Interest rates are headed southwards because of surplus liquidity in the system and lower credit offtake."
Since January, SBI has brought down the interest rate on its highly popular 1000-day deposit scheme by 175 basis points, from a high of nine percent on January 1 to the current 7.25 percent. During the same period, its prime lending rate has declined by only 50 basis points from 12.25 percent to 11.75 percent.
Analysts feel that the ample liquidity and low credit take off has forced the bank to reduce the deposit rates. The deposit base of the banks in the first four months of the fiscal has increased by 
194,597 crore whereas the loan take off has grown only by 23,198 crore. Banks have parked around one lakh crore funds in the Reserve Bank of India (RBI) reverse-repo window. It is also expected that the RBI might reduce the reverse-repo rate by 25 bps to 3.5 percent in an attempt to signal further rate cut by the banks and push up retail and corporate lending.
194,597 crore whereas the loan take off has grown only by 23,198 crore. Banks have parked around one lakh crore funds in the Reserve Bank of India (RBI) reverse-repo window. It is also expected that the RBI might reduce the reverse-repo rate by 25 bps to 3.5 percent in an attempt to signal further rate cut by the banks and push up retail and corporate lending.