The decline in rate of inflation and high real interest rates have prompted State Bank of India to cut the savings bank deposits rate from 4% to 3.5% on deposits below Rs. 1 crore.
This cut in savings bank rate will prompt many banks to follow suit. India’s largest bank said savings bank deposits above Rs. 1 crore will continue to earn 4 % interest.
The bank said there has been a significant outflow of current account, savings account deposits post-demonetisation. Hence, the cut in SB rate will enable it to maintain the marginal cost of funds based lending rate at the current level.
