With effect from May 1, customers of State Bank of India (SBI) savings account will get less interest on deposits of more than one lakh rupees. The interest rates on deposits above one lakh rupees will stand at 3.25 per cent, which will be 2.75 per cent below the repo rate, SBI mentioned on its website- sbi.co.in. Earlier this month, Reserve Bank of India (RBI) cut the repo rate by 25 basis points from 6.25 per cent to 6 per cent. Repo rate is the interest rate at which the central bank lends money to commercial banks such as SBI.
Here are 5 things to know about SBI's new rules that will come into effect from May 1:
1. SBI will link its key pricing decision for savings bank deposits and short term loans to the repo rate of the Reserve Bank of India (RBI), with effect from May 1, 2019.
2. According to the lending major, the step is in order to address the concern of rigidities in the balance sheet structure and for quick transmission of changes in RBI's policy rates.
3. For balances up to Rs 1 lakh, SBI will offer an interest rate of 3.50 per cent per annum, the lender said.
4. "In order to insulate the small deposit holders and small borrowers from the movement of external benchmarks, SBI has decided to exempt Savings Bank account holders with balances up to Rs 1 lakh and borrowers with cash credit or overdraft limits up to Rs 1 lakh from linkage to the repo rate," the bank earlier said in a statement.
5. Earlier this month, SBI also reduced its interest rate by 10 basis points or 0.10 per cent on home loans of up to Rs 30 lakh. The interest rate on SBI housing loans or home loans below Rs 30 lakh now stands in the range of 8.60-8.90%. SBI also reduced its benchmark marginal cost of funds-based lending rate (MCLR) by 5 basis points (0.05 per cent) across all tenors. The MCLR now stands at 8.50 per cent for the one-year tenor, according to SBI.
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