As a positive result of massive deposits collected against the Demonetisation move, SBI slashed bulk deposit rates on Wednesday. Only a few days had elapsed after Prime Minister Narendra Modi stated that rates may be cut down. The surge in deposits engendered the SBI on Wednesday to slash bulk deposit rates by up to 1.9%.
SBI has considerably reduced interest rates on bulk deposits. Bulk deposits ranging between Rs 1-10 crore are eligible for the lowered deposit rates. The new rates will be effective from 24th November onwards. The reduction in deposit rate by the country’s largest bank may also initiate of series of lending rate cuts.
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.”
With the revised interest rates, the 180-210 day fixed deposit will attract 1.90% lower interest rate at 3.85% as against the 5.75% earlier. For fixed deposits between 1 year to 455 days, the rate has been lowered to 4.25 per cent from 6 per cent.Moreover, for FDs between 7 days to 45 days, the new rate will be 3.75 per cent ( precisely 1.25% lower than the last rate).
SBI has garnered deposits of over Rs 1,15,000 crore so far.Earlier this month, SBI had cut fixed deposit rates for less than Rs. 1 crore. However, this was only applicable on select time frames by nearly meager 0.15 per cent.
CFO of a renowned bank, Anshula Kant told to a media agency “The cut was imperative given credit off take is shrinking and fund inflows have been huge.Bulk deposits currently constitute about eight percent to overall deposits at SBI, Kant said.
Lending rates will also gradually come down in tandem with deposit rates, she said. “Every month we have been gradually reducing MCLR rates. She also added, “Going forward, reduction will be a bit steeper.” To express her opinion on the effect of Rate-cut categorically on ‘cost of funds’, Kant says,”It will only come when these higher interest rate deposits mature and fresh ones come at lower rate,” she said.
All in all, the banks have taken positive and notable steps in furthering the benefit of demonetisation to the public. Such benefits have just kicked off. Many such reliefs to the public are yet to be announced by multitude of other banks in the country.