- Interest rate lowered by 0.5% to 3.50% for balance up to Rs 50 lakh
- For balance of Rs 50 lakh and above, rate remains steady at 4% per annum
- More banks are expected to lower their interest rates
The country's largest lender, State Bank of India (SBI), on July 31 introduced a new two-tier savings account interest rate system, reducing interest rates for most of its depositors. On balances below Rs. 1 crore, SBI lowered the interest rate to 3.5 per cent from 4 per cent. On balances above Rs. 1 crore, the bank will continue to offer the rate of 4 per cent. "The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on savings bank deposits," SBI said in a statement. Real interest rate refers to interest rate an investor receives after adjusting for inflation. About 90 per cent of SBI's savings accounts have balances under Rs. 1 crore.
Another large public sector lender Bank of Baroda recently cut interest rate for savings accounts to 3.5 per cent on deposits of up to Rs 50 lakh.