State Bank of India, the country's largest lender, has reduced interest rates on savings bank accounts with balance of Rs 1 lakh or more from today. The State Bank of India customers with Rs 1 lakh or more in their savings account will earn an interest of 3.25 per cent, State Bank of India noted on its website www.sbi.co.in. Meanwhile, customers with less than Rs 1 lakh in their savings bank accounts will continue to earn interest at the rate of 3.50 per cent, the Mumbai-based lender said.
The move to reduce interest rate on deposits of more than Rs 1 lakh comes as the State Bank of India is linking the interest rate to the RBI's repo or short-term lending rate. According to the information provided on the website of State Bank of India (SBI), the interest rate on savings bank accounts with balance above Rs 1 lakh will be 2.75 per cent lower than the RBI's repo rate, which currently stands at 6 per cent.
The interest rate on savings bank account may move up or down depending on what stance the Reserve Bank of India takes on bi-monthly monetary policy meeting.
The SBI was earlier paying interest of 3.5 per cent for savings bank deposits up to Rs 1 crore and 4 per cent for deposits above Rs 1 crore.
In March, the State Bank of India had announced that it will be linking savings deposits rates and short-term loans to the RBI's repo rate from May 1 with an aim to ensure faster monetary policy transmission.