SBI cuts deposit rates to 7.25%

SBI cuts deposit rates to 7.25%Country’s largest public sector lender, the State bank of India, has reduced deposit rates by 25 basis points under its 1000-day scheme launched last year for mopping up funds amid global financial crisis.

The move will help its net interest margin bringing it at par with the interest rates offered by other public sector lenders. The new rates will come into force from September 8.

The 1000-day deposit scheme proved very useful for the bank, reducing its interest rates substantially. SBI still offers interest rate at 7.25 per cent which is higher than any other lender in the same category. SBI Chief Financial Officer, S S Ranjan said, “The scheme was there for 11 months. On review, we decided to discontinue it. We may also re-introduce it going ahead.”

Many banks including Union Bank of India, Punjab National Bank and ICICI Bank had reduced deposit rates few weeks back and currently offer 7% rate for two to three years. Bank of Baroda and HDFC Bank cut interest rates to 6.5 per cent to 6 per cent for the same period.

SBI’s interest margin eroded significantly due to slowdown. Lack of credit demand forced it to keep funds on the tune of over Rs 65,000 crore daily with RBI which offers 3.25% reverse repo rate.

(Image Source: SBI)