In major interest rate revision, the country’s largest lender State Bank of India will pay interest at a flat three per cent per annum on the balances held in savings bank accounts.
It was earlier paying 3.25 per cent for balances up to Rs one lakh, and 3 per cent on balances above Rs one lakh.
In a customer-friendly move, it will stop levying a fine for failure to maintain Average Monthly Balance (AMB) in savings accounts, and will also waiver SMS charges. The lender used to charge Rs 5-15 plus taxes on non-maintenance of AMB, SBI said in statement.
The bank has 445.1 million customers holding savings accounts. Prior to this announcement, customers in metro regions had to have an AMB of Rs 3,000, while those in semi-urban and rural areas had to maintain Rs 2,000 and Rs 1,000, respectively.
In another move, bank also slashed its Marginal Cost of funds-based lending rate (MCLR) by 10-15 basis points across all tenures from March 10, in the tenth such cut this financial year.
The one-year MCLR will now stand at 7.75 per cent, as against 7.85 per cent earlier. MCLR April 2019 was 8.5 per cent.
Consequently, equated monthly instalments (EMI) on home loan accounts linked to MCLR will get cheaper by about Rs seven per lakh, for 30-year tenures. EMIs on car loans will also be reduced by Rs 5 per lakh on seven-year loans.
Keeping adequate liquidity in the system, bank has realigned interest rates on term deposits effective March 10. Besides a 50-basis-point cut on short-term deposits (7-45 days), it reduced the rate for tenures of one year and above by 10 basis points.
Deposits in the 7-45-day bucket will now have rate of 4 per cent rate as against 4.5 per cent earlier. The retail term deposit in the ‘one year and above’ bucket will carry a rate of 5.9 per cent as against 6 per cent earlier. The rate on one-year deposit is down by 110 basis points since May 2019, when it was 7 per cent.
For bulk term deposits of 180-day and above tenures, interest rates have been reduced by 15 bps.