State Bank of India withdraws special fixed deposit scheme Amrit Kalash

The country’s largest lender, State Bank of India (SBI), has withdrawn its special fixed deposit scheme — Amrit Kalash — which offered 7.10 per cent interest for 400 days, with effect from April 1. SBI had introduced this special deposit scheme in April 2023.

 

Other banks, including HDFC Bank and Yes Bank, have also trimmed interest rates on fixed deposits for select tenures. HDFC Bank — the country’s largest private sector lender — reduced deposit rates by 35 basis points on fixed deposits with a tenure of 2 years and 11 months (35 months), and by 40 basis points on fixed deposits with a tenure of 4 years and 7 months (55 months). Yes Bank lowered FD rates on select tenures by 25 basis points.

 

Banks have so far been reluctant to cut deposit rates, given the tightness in deposit mobilisation, despite the Reserve Bank of India’s (RBI) monetary policy committee (MPC) cutting the policy rate by 25 basis points in February. Tight liquidity in the system for over four months has also weighed on the transmission. As a result, the policy rate cut has not been transmitted to lending rates, except for the external benchmark-linked loans.

 

Meanwhile, some banks continue to offer special fixed deposit schemes that typically provide higher interest rates than regular deposits for a specified tenure. IDBI Bank has extended its Utsav FD, which offers 7.40 per cent interest for 555 days, till April 30. Similarly, state-owned Indian Bank has extended two special fixed deposit schemes, offering 7.05 per cent for 300 days and 7.30 per cent for 400 days, also till April 30.