State Bank of India (SBI), the country's largest lender, recently lowered its interest rate on savings accounts with balance above Rs 1 lakh. From November 1, SBI pays an interest rate equal to 2.75 percentage points less than the repo rate on such savings accounts. The bank now pays an interest rate of 3 per cent on savings accounts with balance above Rs 1 lakh, and 3.25 per cent on those with balance up to Rs 1 lakh, according to SBI's website - sbi.co.in. Repo rate is decided by the Reserve Bank of India. It is the key rate at which the RBI lends short-term funds to commercial banks.
Here are SBI's revised interest rates applicable to savings accounts, with effect from November 1:
|Balance||Rate of Interest|
|Up to Rs 1 lakh||3.25%|
|Above Rs 1 lakh|
|3.00% (2.75% below RBI's repo rate)|
SBI had in May this year linked its large savings deposits rates to the repo rate, offering an interest rate of 275 basis points or 2.75 percentage points lower than the repo rate on savings account deposits with balance of over Rs 1 lakh.
Last month, the RBI lowered the repo rate by 0.25 percentage point to 5.15 per cent, marking the fifth straight bi-monthly reduction in the key interest rate so far this year. With the revision in October, the Reserve Bank of India took the cumulative reduction in the repo rate to 135 basis points (1.35 percentage point) in five bi-monthly policy reviews so far this year.
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