SBI raises interest rate on FDs by up to 0.1% ahead of monetary policy meet

Ahead of RBI's monetary policy announcement, the country's largest lender State Bank of India (SBI) has hiked interest rate on fixed deposits by up to 0.1 per cent on select maturities, a move likely to be followed by other banks.

The increase in interest rate is effective July 30, according to notification on the bank's website.

Fixed deposit of maturity one year to less than two years would earn 6.40 per cent, 5 basis points higher than previous rate.

Interest rate on fixed deposit of longer tenure has been raised by 10 basis points. For example, term deposit between three years and less than five years will earn 6.80 per cent as against 6.70 per cent while 5-10 years will get the depositors 6.85 per cent as compared to 6.75 per cent earlier.

However, the bank has retained interest rates on term deposits of less than one year maturities.

The bank had last revised its interest rate on May 28, ahead of second bi-monthly monetary policy for 2018-19 announced on June 6.

RBI had increased the benchmark short-term lending rate (repo rate) by 0.25 percent to 6.25 percent in its last policy review in June on inflationary concerns.

The retail inflation, which is factored in by the MPC, spiked to a five-month high of 5 per cent in June on costlier fuel.

The government has mandated the Reserve Bank to keep inflation at 4 per cent (+/- 2 per cent).