State Bank of India, the country’s largest lender, has announced that it will reduce interest rates on domestic term deposits of five year period, or more, to 8.5 per cent effective from August 7.
The bank currently gives 8.75 per cent interest on term deposits of five years or above, on amounts below Rs 15 lakh. On term deposits on amounts from Rs 15 lakh to less than Rs 1 crore, the annual interest rate is 9 per cent.
“State Bank of India has decided to revise downwards the interest rate on domestic term deposits for tenors five years and above to 8.5 per cent per annum, with effect from August 7, 2012,” the government-run lender said in a regulatory filing to the Bombay Stock Exchange.
Effective from August 7, the bank will offer same interest rate of 8.5 per cent on both these categories – below Rs 15 lakh and Rs 15 lakh to less than Rs 1 crore.
Other rates will remain unchanged.
SBI currently offers the highest interest rate of 9 per cent on term deposit of one year to less-than-two year period.
It had on Wednesday announced 0.50 per cent cut in interest rates on home and car loans.
The decision to alter deposit rates comes within days of Reserve Bank of India (RBI) announcing its first quarterly monetary policy review.
The central bank, despite pressure from India Inc, decided to keep the key interest rate unchanged in view of high inflation.
RBI, however, had lowered the Statutory Liquidity Ratio (SLR), the portion of deposits that banks are required to invest in government bonds, by one per cent to 23 per cent.