Days after Prime Minister Narendra Modi signalled that rates are on the way down, State Bank of India (SBI) on Wednesday slashed bulk deposit rates by up to 1.9% taking advantage of the surge in deposits following demonetisation.

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The reduction in deposit rate by the country's largest lender may be precursor to a lending rate cut.

SBI has reduced interest rates on bulk deposits ranging between Rs 1 to Rs 10 crore. The new rates are effective from Thursday, SBI website showed.

With the revised interest rates, the 180-210 day fixed deposit (FD) will attract 1.90% lower interest rate at 3.85% as against the 5.75% earlier.

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For fixed deposits (FDs) between 1 year to 455 days, the rate has been lowered to 6% from 4.25%.

For FDs between 7 days to 45 days, the new rate will be 1.25% lower at 3.75%.

Earlier this month, SBI had cut fixed deposit rates for less than Rs 1 crore on select maturities by up to 0.15%.

On Sunday, Prime Minister had said, "Over Rs 5 lakh crore deposited with banks are not going to be kept idle. Banks will have to extend loans for all sorts of economic enterprise... for which they will have to bring down their interest rates."

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