The State Bank of India (SBI), the country’s biggest lender, has announced a reduction in interest rates for savings bank deposits. The SBI has officially announced a cut in savings bank deposit interest rates by 0.5%. This revised interest rate on savings bank deposits will be effective from the 31st of July, 2017.
According to this new structure of savings account interest rates, interest rates of 3.5% will be offered for saving deposits balances up to Rs.1 crore. SBI will be offering 3.5% in comparison to the rate of 4% that was previously offered as per its official statement.
The State Bank of India had previously lowered its term deposit rates as well. These rates were lowered by up to 50 basis points for diverse maturities. This reduction in interest rates for savings accounts has not come as a welcome development as far as the bank’s customers are concerned. Industry insiders are concerned about a possible erosion of the State Bank of India’s customer base in the future on account of this decision although no immediate impact has been forecasted.
While some analysts defend this decision in the current financial scenario, some feel that the reduction of interest rates on fixed deposits did inconvenience a large section of retired professionals and senior citizens while this reduction in interest rates in savings accounts will impact a larger section of the populace.