SBI reduces FD rates by 40 GB, RBI stops 7.75% bond sale

SBI reduces FD rates by 40 GB, RBI stops 7.75% bond sale

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Mumbai: State Bank of India (SBI) has reduced interest rates by 40 basis points (100bps = 1 percentage point) on most of its maturity deposits. After the modification, the highest return offered by the bank is 5.4% on the deposit amount in five years. On bulk deposits, SBI has reduced the returns by half a percent.
According to the bank’s website, it will now offer 2.9% on deposits for 45 days, 3.9% for 17 days, 4.4% for one year and 5.1% for three years. However, senior citizens will get half a percent more return on their deposits. The new rates are effective from Wednesday. With SBI reducing its deposit rates, most other public sector banks are expected to follow suit.
Those depositing more than Rs 2 crore with the bank will get only 3% for more than 2 years. Depositors under two years will receive 2.9% of all maturities. With Rs 1 lakh crore of surplus liquidity, the bank is giving negative returns on bulk deposits (after adjusting for inflation).
Meanwhile, the Reserve Bank of India has stated that it will close the sale of 7.75% Savings (Taxable) Bonds, 2018 with effect from the closure of banking business on Thursday – May 28, 2020. A government notification is followed on Wednesday to close it. Of the plan. These bonds, which are sold by banks to retail investors, have a tenure of 7 years, but can be encashed prematurely by senior citizens.
SBI’s cut in FD rates has been the same as the repo rate cut by the central bank last week. Since all retail loans are now linked to an external benchmark – the RBI repo rate – bank loans become cheaper by 40 GB on their next reset.
For corporate borrowers, the cost of the loan depends on a formula based on the marginal cost of the money-based lending rate (MCLR). Last week, SBI President Rajnish Kumar said that the MCLR would be reset in early June.


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