SBI increases interest rate on short-term retail deposits

India’s largest lender, the State Bank of India (SBI) announced an increase of up to 1 percentage point on short-term retail deposits.

The move comes after the government said that it would increase interest in small savings schemes interest rates. The government will increase the interest rates on post office schemes like Public Provident Fund (PPF) and Monthly Income Scheme (MIS) from April 1, a move that will boost savings of small savers.

The increased rate will benefit small-scale savers and also allow SBI to raise funds. According to a new filing with the stock exchanges, the new retail deposit rates will come into effect from Wednesday.

The change in interest rates will allow customers to get new lower rates on existing home loans. They will allowed to make the shift to the new rate by making a fee of 1% of the outstanding loan amount to the bank.

The bank will pay a uniform rate of 8 per cent on retail deposits in various deposits from seven days to less than a year. The bank has increased 7-90 days by 100 basis points, 91-179 days by 75 bps, 181-240 days by 100 bps and 241 days to one year by 25 bps.