SBI cuts interest rate on savings deposit, 90% of customers to be hit hard
Accounts with a balance of Rs 1 crore or less will earn 3.5% per annum effective July 31, while those above Rs 1 crore will continue to earn 4% per annum.business Updated: Jul 31, 2017 23:22 IST
State Bank of India, the country’s largest lender, on Monday introduced a two-tier interest rate structure for its savings bank accounts, reducing interest rates for most of its depositors.
Accounts with a balance of Rs 1 crore or less will earn 3.5% per annum effective July 31, while those above Rs 1 crore will continue to earn 4% per annum, the bank said in a statement.
About 90% of SBI’s savings accounts have balances under Rs 1 crore.
“The decline in rate of inflation and high real interest rates are the primary considerations warranting a revision,” SBI said.
The revision would enable the bank to maintain its Marginal Cost of funds-based Lending Rate (MCLR) at existing rates, the lender added.
The bank’s overnight MCLR rate, effective July 1, currently stands at 7.75%.
Shares of the bank spiked after the announcement, climbing as much as 4.75%.
The Reserve Bank of India is expected to cut interest rates when it meets on Wednesday, a Reuters poll showed, responding to an inflation rate running well below target, which had eased to its slowest pace in over five years in June.
“We expect the policy committee to lower its natural bias to be cautious and lower policy rates by 25 bps this week,” said DBS Group Research in a note.
“Investors are always interested in rate cuts and have been expecting a rate cut for quite some time now,” said Sunil Sharma, chief investment officer at Sanctum Wealth Management.