Country's largest lender State Bank of India (SBI) today slashed interest rates on fixed deposits by up to 1 per cent across various maturities, a move that may prompt other lenders to follow the suit.
The bank, however, has ruled out cut in benchmark lending rate saying the bank is offering one of the lowest rates in the industry.
The base rate or minimum lending rate of SBI stands at 10 per cent. Base rate is the benchmark rate below which a bank cannot lend.
As regards deposit rates, SBI in a statement said, "The bank has decided to revise its retail term deposit rates across various tenors with reduction ranging from 0.25 per cent to 1 per cent."
The bank, however, has raised interest rate on 180 days fixed deposits scheme from existing 7 per cent from to 7.25 per cent.
The new rates would be effective from April 24, it said. Giving details SBI Chief General Manager (financial control) Sunil Pant said the bank has reduced interest rates on fixed deposits with maturity between 7-179 days by 0.75 per cent to 7.25 per cent.
For term deposits with maturity between 181 days to less than 1 year, the new interest rate will be 0.5 per cent lower than the existing 8 per cent, he said.
At the same time, fixed deposits between 1-3 years maturity will earn 0.5 per cent lower return at 9 per cent from existing 9.5 per cent, he said.
Following the RBI's decision to cut key interest rate by 0.5 per cent to 8 per cent in its annual credit policy last week, several banks including ICICI Bank, IDBI Bank and Punjab National Bank reduced both lending and deposit rates.
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