Country’s largest lender State Bank of India has cut its term deposit rates by up to 50 basis points for various maturities. The rates have been revised for medium and long term deposits and for an amount below Rs one crore.
According to the new structure, for two to less than three years deposits, SBI will offer a rate of 6.25 per cent as compared to 6.75 per cent earlier, the bank said. For the similar maturity, the deposit rates for senior citizen have been cut to 6.75 per cent from 7.25 per cent.
For deposits maturing between three years and 10 years, the rates have been lowered by 25 basis points to 6.50 per cent. The bank will be offering the new rates for fresh deposits and renewals applicable from April 29, 2017.
The short-term deposits, that is, for deposits maturing between seven days to less than two years, the rates have been left unchanged.
The bank is offering highest rates of 6.90 per cent for one year to 455 days term deposits.
SBI has also not changed its marginal cost of funds based lending rates (MCLR). Its one-year MCLR is at eight per cent.
After the monetary policy review in February, RBI Governor Urjit Patel had said there was scope for more rate cuts by banks, pointing out that the weighted average lending rate has come down only by 0.85-90% as against a 1.75% cut in policy rates since January 2015.
“The Monetary Policy Committee took note of the reduction in bank lending rates but saw further scope in a complete reduction, including for small savings and administered rates,” Governor Urjit Patel had said.
“There is still scope for lending rates to come down further because our policy rates came down by 175 basis points and weighted average lending rates have come down only by 85- 90 basis points. I think there is scope for more transmission,” Patel had added.
The lack of transmission has been one of the dominant worries expressed by RBI during the past two years when it was in an accommodative stance.