SBI raises rates on bulk deposits by 100 basis points

State Bank of India has raised its rate on all bulk term deposits by one per cent (100 basis points) from Friday. The revision comes after about a year and also signals the end of a rate easing cycle, said bankers, which had begun in the second quarter of 2015-16.

Bulk deposits are those where amounts kept are at least Rs 1 crore or above. Senior officials at the country's largest bank said interest rates offered on bulk money raised from companies and institutions were below those offered by competing banks. This was affecting corporate relationships, with SBI losing in bids sought by those entities for parking their surplus funds. SBI has seen an outflow of over Rs 70,000 crore from bulk deposits in a year.

For short-term deposits (46-179 days), it will offer 4.85 per cent; for those of a year to 10 years, the new rate is 5.25 per cent.

In November last year, SBI cut bulk deposit rates by up to 1.9 per cent (190 basis points), taking advantage of the surge in deposits with demonetisation. While banks still have excess resources, for want of credit demand, the effect of cheap money after demonetisation is fading. Another SBI executive said the huge flow into savings and current deposits in the third and fourth quarters of 2016-17 was a thing of the past. However, there are still excess resources, parked in government bonds and securities.

SBI had seen overall growth of about 10.2 per cent in deposits for the 12 months ended September 2017, to Rs 26,23,180 crore. Term deposits grew at a muted rate of almost three per cent to Rs 13,92,980 crore. This takes into account the merger of its five associate banks and Bharatiya Mahila Bank in April.