SBI cuts fixed deposit interest rates

India's largest lender, State Bank of India (SBI) Friday announced its decision to cut interest rates on fixed deposits below Rs.1 crore of varying maturities.

In a filing with the Bombay Stock Exchange (BSE), the SBI said effective from Dec 8, its interest rate will be lower by 0.25 percent on certain deposit period for sums less than Rs.1 crore.

As per the revised rates, fixed deposits of less than Rs.1 crore for one year and less than three years, the interest rate will be 8.5 percent - down from the current levels of 8.75 percent.

The interest rate on deposits for three years to less than five years and five years and above will be 8.50 and 8.25 percent respectively.

The revised rates are applicable for NRE deposits for tenures one year and above, SBI said.

Incidentally SBI had reduced the interest rates on fixed deposits for tenures over five years to 8.50 percent from 8.75 percent only in August.

According to analysts, banks are flush with funds with credit off take slowing down.