SBI, Canara Bank, 2 other public sector banks in India cut deposit, loan interest rates

SBI or State Bank of India, Bank of India, Canara Bank and Oriental Bank of Commerce have announced to reduce the loan interest rates and deposit interest rates. These public sector banks in India decided to take this deposit and loan interest rate deduction after the Reserve Bank of India (RBI) cut down the cost of funds for banks in its Monetary Policy Committee (MPC) meeting. 

SBI issued a press statement informing about the sharp cut in the loan interest rate and SBI fixed deposit returns citing, "In view of surplus liquidity in the system, SBI realigns its interest rate on Retail Term Deposits (less than Rs.2 Crs) and Bulk Term Deposits (Rs.2 Crs & above) w.e.f. February 10, 2020. The bank slashed Term Deposits rates by 10-50 bps in the Retail segment and 25-50 bps in the Bulk segment. After this interest rate cut announced by the SBI, the maximum return that an SBI customer can get on its SBI fixed deposit is 6 per cent. The impact of recent RBI policy measures and reduction in deposit rates will be reflected in the next review of MCLR." India's largest lender went on to announce that it has reduced its MCLR by 5 bps across all tenors. The one-year MCLR comes down to 7.85 per cent per annum from 7.90 per cent per annum with effect from 10th February 2020. This is the ninth consecutive cut in MCLR in FY 2019-20.

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Meanwhile, three other public sector banks in India has announced to cut deposit and loan interest rates. Bank of India has reduced its home loan interest rate and now it is lending home loan from 8 per cent onwards. It has also cut MCLR by 10 bps for all bank deposits having maturity up to six months.

Oriental Bank of Commerce reduced its MCLR by up to 10 bps with various tenors. This decision will become effective from 10th February 2020. Retaining its one-year MCLR at 8.15 per cent, the Oriental Bank of India reduced its one-month and overnight rates by 10 bps and 5 bps respectively. 

Canara Bank reduced its MCLR for a one-year tenor by 15 bps with effect from 7th February 2020. This 15 bps MCLR cut across tenors led to a change in various bank deposits. From now onwards, the interest rate charged on overnight and one-month loans has now reduced to 7.65 per cent, while for three months, six months and one year tenor loans new interest rates would be 7.95 per cent, 8.10 per cent and 8.20 per cent respectively.