SBI cuts interest rate on savings accounts; removes minimum balance requirement

The country’s largest lender State Bank of India (SBI) on Wednesday rationalised interest rate on all savings bank (SB) accounts to a flat 3 per cent, a move affecting 44.51 crore account holders.

The bank also waived the requirement for maintaining minimum balance in SB accounts.

Keeping in mind the ‘Customers First’ approach, the bank further said it has also waived SMS charges, which will bring significant relief to all the customers.

“Bank has also rationalised interest rate on SB Account to a flat 3 per cent p.a. for all buckets,” it said.

Currently, the interest rate on SB accounts is 3.25 per cent for deposits up to Rs 1 lakh in SB accounts, and 3 per cent for deposits above Rs 1 lakh.

The State Bank of India (SBI) decided to waive maintenance of Average Monthly Balance (AMB) for all SB accounts.

“The charges on maintaining AMB are now waived off on all 44.51 crore SBI savings bank accounts,” it said.

Currently, SBI customers need to maintain AMB of Rs 3,000, Rs 2,000 and Rs 1,000 in metro, semi urban and rural areas, respectively.

The bank used to levy a penalty of Rs 5 to Rs 15 plus taxes on non-maintenance of AMB.

The SBI also said it had reduced its fixed deposit rates for certain tenors and marginal cost of funds-based lending rates (MCLR) across various tenors.

Making it the second reduction in a month, the public sector bank has reduced retail term deposits (less than Rs 2 crore) by 10 to 50 basis points for a few tenors.

“The one-year MCLR comes down to 7.75 per cent from 7.85 per cent with effect from March 10, 2020. It’s the tenth consecutive cut in MCLR in FY20,” the country’s largest lender said in a statement.

With this, the equated monthly instalments (EMIs) on home loans linked to MCLR will get cheaper by around Rs 7 per Rs 100,000 on a 30-year loan. EMIs on car loans will come down by Rs 5 per Rs 100,000 on a 7-year loan.

In view of adequate liquidity in the system, the SBI has realigned the interest rates on term deposits as of March 10, 2020.

The retail term deposit rates have been reduced by 10 bps for one year and above tenor, and 50 bps for up to 45 days. The bulk term deposit rates have been reduced by 15 bps for 180 days and above tenors.

Fixed deposits (FDs) maturing between seven and 45 days will offer an interest rate of 4.5 per cent as against 4 per cent earlier.

Interest rates on FDs maturing in one year and above have been reduced by 10 basis points.

One-year to less than two-year tenor FD will earn an interest rate of 5.9 per cent against 6 per cent earlier.

FD for similar tenor will fetch an interest rate of 6.4 per cent instead of 6.5 per cent for senior citizens. 

The bank has also reduced interest rates on bulk term deposits (Rs 2 crore and above) by 15 basis points for 180 days and above tenors.

FD rates in the bulk category for tenor of one-year and above will earn 4.6 per cent instead of 4.75 per cent.

In February, the bank had slashed term deposit rates by 10-50 basis points in the retail segment and 25-50 basis points in the bulk segment.

Further, the one-year marginal cost of fund-based lending rate (MCLR) has been reduced by 10 basis points to 7.75 per cent from 7.85 per cent earlier, the bank said.

This is 10th consecutive cut in MCLR by the bank in the current fiscal.

Overnight and one-month MCLRs have been reduced by 15 basis points to 7.45 per cent each. Three-month MCLR has been revised to 7.5 per cent from 7.65 per cent.

The new two-year and three-year MCLRs stand reduced by 10 basis points to 7.95 per cent and 8.05 per cent, respectively.

The rates became effective from March 10.

On Monday, another state-run lender Union Bank of India had announced cut in its MCLR by 10 basis points across all tenors, effective March 11.

This is the ninth consecutive rate cut announced by the Mumbai-based bank since July 2019.

The bank has cut its one-year MCLR to 8 per cent from 8.1 per cent.

The overnight MCLR has been revised to 7.55 per cent, while the new one-month rate stands at 7.6 per cent, the bank had said. — Agencies