SBI savings bank account interest rates slashed to 2.75 pct

The State Bank of India (SBI) has announced a reduction in its savings bank account annual interest rate to historic low of 2.75 per cent. The largest Indian commercial bank announced about the SBI savings bank account interest rate revision yesterday in a press statement. The new SBI savings bank deposit interest rates will become effective from 15th April 2020, the SBI said citing reason for the step was 'enough of liquidity' available with them.

As per the SBI statement, "In view of adequate liquidity in the system, SBI realigns its interest rates on Savings Bank Deposits, with effect from 15th April 2020." According to the official website of the SBI — sbi.co.in — SBI savings bank deposit annual interest rate on deposits up to Rs 1 lakh and deposits above Rs 1 lakh has been fixed at 2.75 per cent from the existing 3.0 per cent.

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After the recent Reserve Bank of India's (RBI's) announcement to cut CRR (Cash Reserve Ratio) by 1 per cent, Indian banks have enough of liquidity (Rs 1.37 lakh crore additional money in the banking system) to operate their business. Hence, they don't need further liquidity. This action of the SBI to cut interest rates on saving bank deposit is clear indication that the largest commercial bank of India is not in mood to raise further money through bank deposits. And taking cue from SBI, other banks are also expected to follow suit. So, in coming times, we may witness a number of banks cutting interest rate on savings bank deposits.

Click here to find full list of SBI savings bank deposit interest rate

Indian banks are expected to discourage the bank deposits till demand for credit grows. In fact, the Government of India has also cut the postal savings interest rates. The post office time deposit now offers 5.5 per cent for one to three years tenure and 6.7 per cent for 5 years deposit tenor. While the post office savings rate is at 4 per cent, the sharpest reduction in the post savings is anyway clearing the grounds for banks for customers to migrate.