SBI raises FD interest rates for some tenures by 10 bps

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Mumbai | Updated: Jul 31, 2018 2:10 AM

State Bank of India (SBI) on Monday raised interest rates on retail fixed deposits (FDs) of some maturities by 5-10 basis points (bps).

SBI raises FD interest rates for some tenures by 10 bps

State Bank of India (SBI) on Monday raised interest rates on retail fixed deposits (FDs) of some maturities by 5-10 basis points (bps).

Rates on bulk deposits with maturities longer than three years were also raised, while those on deposits with maturities of 729 days or less were slashed. The rate revision comes days ahead of the Reserve Bank of India’s (RBI) monetary policy review.

FDs of under Rs 1 crore maturing between one year and two years at SBI will now yield 6.7% for general deposit-holders, up from 6.65%. Senior citizens will earn 7.2% on deposits with the same maturity against 7.15% earlier.

Deposits maturing between two years and three years will now yield 6.75%, 10 bps higher than earlier. For senior citizens, they will earn 7.25%, up from 7.15% earlier.

Term deposits of over `1 crore maturing between 46 days and 179 days will now earn 6.25%, down 45 bps from 6.7% earlier. Those maturing between 180 days and 210 days will earn 35 bps less at 6.35%, while those maturing between 210 days and 364 days will yield 6.4%, also 35 bps less than earlier.

Rates on bulk deposits maturing between one year and less than two years were dropped 30 bps to 6.7%.

Bulk deposits maturing in the three-years-to-less-than-five-years bucket will now earn 15 bps more at 6.8%, while those with maturities of five years or more will yield 60 bps more at 6.85%.

The differential pricing of deposits may have to do with public-sector banks’ strategy to shed expensive bulk deposits and have a deposit mix skewed in favour of cheaper retail deposits.

Banks have taken to raising deposit rates in recent months amid competition from mutual funds and hardening bond yields. Since November 2017, the base effect of demonetisation has also begun to kick in, leading to deposit growth hitting multi-year lows. A situation of tighter liquidity has added to the upward pressure on rates. Between November 2017 and March 2018, deposits have grown by 3-7% on a fortnightly basis, according to data released by RBI.

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