SBI gains after cutting savings bank rate to 3.5% for deposits below Rs 1 cr

Nifty PSU Bank index was up 3.2% as compared to 0.33% rise in Nifty 50 at 11:37 am.

Shares of public sector undertakings (PSU) banks were trading higher by upto 4%, recovering from their intra-day lows, after the state-owned banking giant State Bank of India (SBI) cut saving bank interest rates.

SBI rallied by 2.7% to Rs 307 on BSE after the bank introduced a two-tier saving bank interest rate from today, due to the decline in the rate of inflation and high real interest rates.

“The Bank is introducing 2 tier saving bank interest rate w.e.f. 31st July, 2017. While balance above Rs 1 crore will continue to earn interest rate at 4% per annum, interest rate at 3.5% per annum shall be offered on balances of Rs 1 crore and below,” SBI said in a press release.

The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on saving bank deposits, it added.

The revision in saving bank rate would enable the bank to maintain the MCLR (marginal cost based lending rates) at existing rates, benefiting a large segment of retail borrowers in SME, agriculture and affordable housing segments, it added.

SBI had cut the MCLR by 90 basis points effective 1st January 2017, on the strength of large inflows in saving and current accounts during the demonetisation period in the month of November and December, 2016. There has been significant outflow of CASA deposits since then, SBI said.

Among the other PSU banks, Bank of Baroda, Indian Bank, Punjab National Bank, Bank of India, Union Bank of India and Canara Bank were up between 1% and 4% on BSE.

At 11:37 am; Nifty PSU Bank index, the largest gainer among sectoral indices, up 3.2% as compared to 0.33% rise in Nifty 50 and less than 1% gain in Nifty Bank and Nifty Private Bank index.

COMPANY	DAY'S LOW(RS)	DAY'S HIGH(RS)	LATEST(RS)	RISE(%)
PUNJAB NATL.BANK	153.50	163.30	161.75	5.4
DENA BANK	32.25	33.95	33.90	5.1
BANK OF BARODA	160.60	168.35	167.05	4.0
ORIENTAL BANK	141.90	148.30	147.45	3.9
ST BK OF INDIA	298.10	310.25	309.40	3.8
BANK OF INDIA	158.50	165.45	164.25	3.6
PUN. & SIND BANK	53.05	55.10	54.80	3.3
VIJAYA BANK	68.40	71.20	70.45	3.0
UNION BANK (I)	154.30	159.60	158.90	3.0
BANK OF MAHA	27.35	28.75	28.10	2.7
ALLAHABAD BANK	72.25	74.70	74.20	2.7
IDBI BANK	58.10	59.85	59.65	2.7
CENTRAL BANK	86.50	89.50	88.70	2.5
CORPORATION BANK	50.15	51.40	51.40	2.5
SYNDICATE BANK	72.15	74.40	73.90	2.4
INDIAN BANK	308.20	317.00	315.55	2.4