The State Bank of India (SBI) lowered interest rates on
domestic term deposits of maturity of five years and more by 25 basis points to
8.50 per cent.
The deposit rate cut came just a day after the country’s
largest bank brought down interest rate on auto and car loans.
The SBI expects its NIMs (net interest margins) to be around 3.75 per cent during
this fiscal year. NIM is the percentage difference between interest earned on
advances and that paid on deposits.
The SBI said it had decided to revise downwards the interest
rate on domestic term deposits for tenors 5 years and above to 8.5 per cent
with effect from August 7.
The bank now offers an interest rate of 8.75 per cent on
deposits below Rs 15 lakh, and 9 per cent on deposits from Rs 15 lakh to less
than Rs 1 crore.
In June, the SBI had raised interest rates on deposits by 25
basis points for those in the three to five-year maturity bucket.
However, the SBI’s decision came in contrast to that of
another PSU lender — Punjab National Bank, which raised deposit rate by 25
basis points.
The second largest nationalised bank said it was increasing
the rate of interest on the single domestic deposit of less than Rs 1 crore to
8.75 per cent for maturity of one year.
The SBI reduced lending rates by up to 60 basis points on
home and auto loans. It however, kept the base rate unchanged at 10 per cent,
and this will mean that its existing customers will not enjoy the interest rate
relief.
