State Bank of India has slashed domestic term deposit rates by up to 100 basis points.
This is the fifth time in the last six months that the bank has cut deposit rates. The revised rates come into effect from Friday. SBI has, however, left its base rate at 10 per cent. Base rate is the benchmark lending rate below which no bank can lend.
Explaining the rationale for the deposit rate cut, SBI Chairman Pratip Chaudhuri said “From April 1 till August 31, our deposits have grown by about Rs 78,000 crore while our loans have grown only by about Rs 20,000 crore.
“… The pipeline for loan growth in large credit is rather dry; hence, we want to go slow on deposit mobilisation.”
Chaudhuri said there will be no cut in the base rate.
SBI will quote only two interest rates on term deposits below Rs 15 lakh — 6.50 per cent on the five deposit slabs maturing in less than a year and 8.50 per cent on the four deposit slabs beyond one year and up to 10 years.
Further, the bank will quote only two interest rates on term deposits of Rs 15 lakh to less than Rs 1 crore — 7.50 per cent on the five deposit slabs maturing in less than a year and 8.50 per cent on the four deposit slabs beyond one year and up to 10 years.
The deposit rate cut by SBI is likely to trigger realignment in deposit rates by other banks.