SBI reduces bulk FD rates by 25 bps

State Bank of India, the country’s largest lender, cut the interest rate on its fixed deposits (FD) up to 179 days by 50 basis points (bps) on Tuesday. It also reduced interest rates on bulk deposits by 25 bps.

The rate on FDs between seven to 179 days was reduced to seven per cent from the earlier 7.5 per cent. The new rate would be effective from Friday. Chief Financial Officer S K Saraf said the bank's liquidity position was comfortable.

The credit growth was 13 per cent in the first quarter. SBI expects to grow the loan book by 15-16 per cent this financial year, chairman Arundhati Bhattacharya had said in early July.

The bank has not been accepting deposits at rates higher than the card rates since October 2013, the CFO said.

In the case of bulk deposits above Rs 1 crore, the downward revision has been effected in two maturity buckets. The interest rate on deposits between seven and 60 days has been reduced by 0.25 per cent to 6.25 per cent. For 61 days to less than a year, it has been reduced to 6.75 per cent from seven per cent.

Last month, the central bank had left the key policy rate unchanged in its bid to rein in inflation. The repo rate, at which the Reserve Bank of India lends to banks, was retained at eight per cent. The cash reserve ratio for banks was kept unchanged at four per cent.

SBI had previously reduced its FD rates in February, by up to 0.5 per cent on select maturities. It was lowered by 0.25 per cent for maturities of three to five years. Those for five years and above were cut by 0.50 per cent.
SBI’S MOVES

• Interest rate on fixed deposits up to 179 days cut 50 bps
• The rate on FDs between 7-179 days reduced to seven per cent from the earlier 7.5%
• Loan book expected to grow 15-16% in FY15