The State Bank of India (SBI) on Monday said it will slash term deposit (TD) rates by up to 25 basis points and also reduce its marginal cost of funds based lending rate (MCLR) by 10 basis points (bps) across all tenors with effect from September 10.
India’s largest bank has effected a steeper cut in deposit rates vis-a-vis MCLR probably to protect its margins. It attributed the realignment in interest rate on TDs to the falling interest rate scenario and surplus liquidity. Retail TD rates and bulk TD rates have been revised downwards by by 20-25 bps and 10-20 bps across tenors, respectively.
One basis point equals one-hunderedth of a percentage point.
Following the rate cut, the highest interest rate that the bank will offer will be 6.50 per cent (6.70 per cent now) on retail domestic TDs (below Rs 2 crore) in the one year to less than two years maturity bucket.
In the case of domestic bulk TDs (above Rs 2 crore), the highest interest rate that SBI will offer will be 6.30 per cent (6.40 per cent now) in the one year to less than two years maturity bucket.
Following the rate cut, the 1 Year MCLR will come down to 8.15 per cent from 8.25 per cent.
SBI, in a statement, this is the fifth consecutive cut in MCLR in FY 2019-20. All rupee loans sanctioned and credit limits renewed by banks with effect from April 1, 2016 are priced with reference to MCLR, which will be the internal benchmark for such purposes.