 "SBI slashes domestic term deposit rates by 20 basis points across tenors")
The country’s largest lender, State Bank of India (SBI), has cut interest rates on retail domestic term deposits by 20 basis points (bps) across tenors, effective 16 May, reflecting improved liquidity conditions.
As per the updated information on SBI’s website, the revised rate for deposits maturing between 211 days and one year is now 6.30 per cent, down from the earlier 6.5 per cent.
The rate for deposits of one year to less than two years has been revised to 6.5 per cent. The highest return for retail investors is now 6.7 per cent for the two years to less than three years bucket. Deposits of three to less than five years will fetch 6.55 per cent interest.
Fixed deposits maturing in five to ten years now offer an interest rate of 6.30 per cent for the general public.
This is the second consecutive reduction in deposit rates by SBI. In April, the bank had slashed rates by 10–25 bps, mirroring the Reserve Bank of India’s (RBI) policy rate actions and the improving liquidity scenario.
In its April policy review, the RBI cut the key policy repo rate by 25 bps for the second time in a row and shifted its monetary policy stance from ‘neutral’ to ‘accommodative’ to support growth. The repo rate now stands at 6 per cent.
The rate cuts and competitive deposit environment have impacted banks’ interest margins. SBI’s net interest income (NII) for the March quarter (Q4FY24) rose 2.69 per cent year-on-year (Y-o-Y) to ₹42,775 crore, while it grew 3.21 per cent sequentially.
However, the lender’s net interest margin (NIM)—the difference between interest earned and interest paid—on domestic operations declined by 32 bps to 3.15 per cent in Q4FY24, from 3.47 per cent in the same period last year. On a sequential basis, the NIM remained flat.