SBI cuts rates on savings bank deposits by 25 bps to 3.25 per cent

The Indian Express
October 10, 2019
By: ENS Bureau


The bank also slashed its retail term deposit and bulk term deposit interest rates by 10 bps and 30 bps, respectively, for ‘1 year to less than 2 years’ tenor, with effect from October 10, 2019.

Close on the heels of the Reserve Bank of India’s (RBI’s) fifth cut in the repo rate last week, State Bank of India (SBI) on Wednesday slashed the interest rate on savings bank deposits (with balances up to Rs 1 lakh) by 25 basis points (bps), from 3.50 per cent to 3.25 per cent, with effect from November 1, 2019.

The bank also slashed its retail term deposit and bulk term deposit interest rates by 10 bps and 30 bps, respectively, for ‘1 year to less than 2 years’ tenor, with effect from October 10, 2019. It has also reduced the MCLR (marginal cost of funds based lending rate) by 10 basis points, making home and personal loans cheaper for customers. This has been done “in view of the adequate liquidity in the system”, the bank said. Other banks are set to follow suit and slash the rates in order to retain their customer base.

According to banking sources, SBI’s move to trim rates on its savings deposits to 3.25 per cent is likely to trigger a spate of cuts across banks as they have moved to repo-linked loans. For big banks such as SBI, savings deposits form 25-35 per cent of deposits. The rate for SBI’s FD tenure of one year to less than 2 years is now 6.4 per cent and for 180 days to 210 days, the rate will be 5.80 per cent.

Lender hopes to boost consumption amid slowdown
SBI’s decision to cut both the lending and deposit rates may nudge people to borrow more and spend more at a time when the economy is facing a consumption slowdown. However, the issue of transmission of RBI’s repo rate cut into lending rates remains a major concern. While the bank slashed the deposit rates by up to 30 basis points, the lending rates have been brought down by only 10 basis points. The cut in MCLR may not immediately benefit the floating rate home loan customers of the bank. It remains to be seen as to what other banks and HFCs do.

Earlier, SBI had linked the interest rate on savings account deposits with balance of over Rs 1 lakh to the repo rate. Currently, it stands at 3 per cent. SBI’s domestic savings bank deposits stood at more than Rs 10.64 lakh crore at end-December 2018.

SBI has reduced its MCLR — sixth consecutive rate cut in FY19-20 — by 10 bps across all tenors in view of the festive season and extending benefit to customers across all segments. The one-year MCLR comes down to 8.05 per cent per annum from 8.15 per cent with effect from October 10. SBI’s two-year MCLR has declined by 10 bps to 81.5 per cent, three-year MCLR to 8.25 per cent and six-month MCLR to 7.9 per cent.

On October 4, the RBI slashed its key policy rate by 25 basis points to 5.15 per cent — the lowest level since March 2010 — stating that the “continuing slowdown warrants intensified efforts to restore the growth momentum”. This means interest rates on certains loans and deposits of banks will automatically come down as the RBI had already directed banks to link their interest rates to a benchmark rate. The fifth consecutive cut this year by the RBI has brought down the repo rate by 135 basis points from 6.50 per cent in 2019.

“With inflation being within the target, the forward guidance remains accommodative to revive growth. We believe the transmission of monetary policy rate changes will be faster now that banks have already introduced repo-linked retail and MSE products and the rate cuts will be passed on to these borrowers. With the busy and festive season having started, this rate cut will boost market sentiments,” said Padmaja Chunduru, MD and CEO of Indian Bank.

Mrutyunjay Mahapatra, MD and CEO of Syndicate Bank, said, “The RBI has continued its accommodative stance on monetary policy and interest rates. With this, the banking sector, which has moved from MCLR to external benchmark loan rate, shall pass on the 25 bps reduction to the ultimate consumers faster than in the past.” Stepping up its initiative to speed up transmission of rate reduction benefits to customers, the RBI last month made it mandatory for banks to link all new floating rate personal or retail loans and floating rate loans to MSMEs to an external benchmark like the repo rate effective October 1, 2019.

Reference:-https://indianexpress.com/article/business/banking-and-finance/sbi-cuts-rates-on-savings-bank-deposits-by-25-bps-to-3-25-per-cent-6061662/

Comments

Post a Comment

Popular posts from this blog

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo...
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav...
Read more

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017...
Read more