In view of the falling interest rate scenario and surplus liquidity, State Bank of India (SBI), has announced a reduction in fixed deposit interest rates across all maturities. The bank made this announcement that the new rates will be effective from August 1, 2019, on its official website.
SBI in a press release has stated that it has cut rates on retail term deposits below Rs 2 crore and on bulk term deposits above Rs 2 crore. For time deposits with longer tenors, there is a reduction of up to 20 basis points (bps) in the retail segment and 35 bps in the bulk segment. Interest rates have been slashed by 50-75 bps for time deposits with shorter tenors, i.e., up to 179 days.
This comes as bad news for fixed income investors as the government reduced interest rates on small savings schemes like National Savings Scheme, Kisan Vikas Patra, and Public Provident Fund have been cut by 10 basis points. This was announced in late June. Added to thisBanks, too, have been reducing interest rates on fixed deposits post-RBI’s last repo rate cut in June.
According to the SBI website, the proposed rates of interest will applicable to fresh deposits and renewals of maturing deposits. The interest rates on “SBI Tax Savings Scheme 2006(SBITSS)” Retail Deposits and NRO deposits shall be aligned as per the proposed rates for domestic retail term deposits.
(Source Economic Times)