SBI cuts peak deposit rate

State Bank of India (SBI) has reduced its peak rate on deposits by 25 basis points to 9.25 per cent.

However, the bank has raised interest rates by 25 basis points on deposits for 271 days to less than one-year and for those over 3 years.

The bank has reduced the rate on the SBI Smart Deposit Scheme for 550-day deposits from 9.5 per cent to 9.25 per cent, effective August 9.

Public sector banks like Canara Bank, Bank of India and Bank of Baroda hadcut deposit rates by 50 basis points on one-year deposits last week.

Finance minister, P. Chidambaram had asked banks to bring down interest rates Reserve Bank of India (RBI ) announced a 50 basis-point hike in the CRR to 7 per cent.

SBI has also reduced the interest rate on its super-saver term deposit scheme for 4 to 5-year deposits by 25 basis points to 9.25 per cent. The bank has decided to continue with the special deposit schemes offering 9.25 per cent till further notice.

SBI, which earlier offered a flat rate of 8.25 per cent on deposits over one-year, has now split them into three categories: 8 per cent for deposits of one year up to 2 years; 8.25 per cent for 2 years up to 3 years and 8.5 per cent for 3 years up to10 years.

Revision in deposit rates is expected to lower the cost of SBI’s funds as about 70 per cent of the bank’s deposits are in the 1-3 years maturity for which rates have been reduced.