Mumbai, July 31 - The State Bank of India (SBI) on Monday announced a 50 basis points (bps) cut in the interest rates for savings accounts having deposits below Rs 1 crore, effective immediately. The revised interest rate for savings accounts having up to Rs 1 crore deposit now stands at 3.5% while those having above Rs 1 crore balance in their savings accounts will continue to enjoy the 4% interest rate.
"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. SBI Managing Director Rajnish Kumar said that 90% of the total savings accounts held by the bank have balance below Rs 1 crore.
He said the cut in interest rates was not likely to affect the number of savings accounts with the bank or its current and savings account (CASA) ratio.
"It is the convenience, safety, trust which is still in the bank's favour. We are not anticipating any major impact on the CASA ratio or saving accounts," he said.
SBI had maintained the 3.5% interest rates for its savings accounts from 2003 to 2011. In 2011, it was increased to 4% for all saving deposit accounts. Kumar said the rate cut had nothing to do with the impending Reserve Bank of India (RBI) monetary policy on August 2.
Further, the bank had cut the marginal cost based lending rates (MCLR) by 90 bps effective from January 1, on the strength of large inflows in savings and current accounts during the demonetisation period in the month of November and December 2016.
"There has been a significant outflow of CASA deposits since then. The revision in saving bank rate would enable the bank to maintain the MCLR at the existing rates, benefiting a large segment of retail borrowers in Small and Medium enterprise (SME), agriculture and affordable housing segments," it said.