SBI cuts down interest rates for Savings Bank Deposits below Rs 1 crore, introduces two-tier system

The country's largest lending bank cut down its interest rate by 0.5 per cent for Savings Bank Deposits below Rs 1 crore, introducing a two-tier structure of interest rates for Savings Deposits.

Published: 31st July 2017 12:39 PM  |   Last Updated: 31st July 2017 03:10 PM   |  A+A-

The bank will offer an interest of 3.5 per cent per annum, instead of the original 4 per cent per annum for Savings Bank Deposits below Rs 1 crore. | File Photo

By Online Desk

The country's largest lending bank, the State Bank of India (SBI) cut down its interest rate by 0.5 per cent for Savings Bank Deposits below Rs 1 crore and thereby introduced a two-tier structure of interest rates for Savings Deposits.

Under the new system, the bank will offer an interest of 3.5 per cent per annum, instead of the original 4 per cent per annum for Savings Bank Deposits below Rs 1 crore.

The interest rate for Savings Bank Deposits above Rs 1 crore will, however, remain the same at 4 per cent per annum.

About 90 percent of SBI's savings accounts have balances under Rs 1 crore.

"The decline in rate of inflation and high real interest rates are the primary considerations warranting a revision," SBI said.

The revision would enable the bank to maintain its Marginal Cost of funds-based Lending Rate (MCLR) at existing rates, the lender added.

The bank's overnight MCLR rate, effective July 1, currently stands at 7.75 per cent. 

SBI stock prices gained by over 4 per cent today, rallying over 12 points, after the introduction of the two-tier interest rate system.

The bank's stock prices both at the Bombay Stock Exchange and National Stock Exchange were close to Rs 312 at 12:29 pm today.

(With inputs from Reuters)



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