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31 July 2017
 |
SBI (The Total Investment & Insurance
Solutions)
State Bank
of India (SBI), the country’s largest lender, has once again hit savings
account holders by reducing its interest rates to 3.5% from 4%. These rates
would be applicable for savings account with up to Rs1 crore deposit. However,
those with a deposit of over Rs1 crore in the savings account would continue to
get 4% interest. According to SBI's Managing Director Rajnish Kumar, 90% of the
total savings accounts held by the bank have a balance of below Rs1 crore.
In a
regulatory filing, SBI said, "The bank is introducing a two-tier saving
bank interest rate with effect from 31 July 2017. While balance above Rs1 crore
will continue to earn interest at 4% per annum, interest at 3.5% per annum
shall be offered on balances of Rs1 crore and below."
"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," the lender added.
In a
release, Kumar said the cut in interest rates was not likely to affect the
number of savings accounts with the bank or its current and savings account
(CASA) ratio. "It is the convenience, safety, trust which is still in the
bank's favour. We are not anticipating any major impact on the CASA ratio or
saving accounts," he added. The
Total Investment & Insurance Solutions
SBI had
maintained the 3.5% interest rates for its savings accounts from 2003-11. In
2011, it was increased to 4% for all saving deposit accounts. The Total Investment & Insurance
Solutions
Kumar said
the rate cut had nothing to do with the impending Reserve Bank of India (RBI)
monetary policy on 2 August 2017. The
Total Investment & Insurance Solutions
Further, the
bank had cut the marginal cost based lending rates (MCLR) by 90 basis points
(bps) from 1 January 2017, on the strength of large inflows in savings and
current accounts during the demonetisation period in November and December
2016. The Total Investment &
Insurance Solutions
"There
has been a significant outflow of CASA deposits since then. The revision in
saving bank rate would enable the bank to maintain the MCLR at the existing
rates, benefiting a large segment of retail borrowers in small and medium
enterprise (SME), agriculture and affordable housing segments," SBI said.The Total Investment & Insurance
Solutions
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