SBI pares savings account interest rate to 3%, scraps minimum balance fine

For bulk term deposits of 180-day and above tenures, interest rates have been reduced by 15 bps
In major rate revision, State Bank of India (SBI) has decided to pay interest at a flat 3 per cent per annum to savings bank account holders.

Earlier, it paid 3.25 per cent for balances up to Rs 1 lakh. The rate was 3 per cent for savings bank deposit accounts with balances above Rs 1 lakh.

In a customer-friendly move, it will stop levying fine for failing to maintain average monthly balance in savings accounts. The bank used to levy a penalty of Rs 5 to Rs 15 plus taxes on non-maintenance of average balance, SBI said in statement. It will also waive SMS charges.

The charges on maintaining average balance have now been waived off on all 445.1 million SBI savings bank accounts. 

Currently, customers need to maintain average balance of Rs 3,000 in a metro region, Rs 2,000 in semi-urban areas and Rs 1,000 in rural areas.

The bank also slashed its marginal cost of funds-based lending rate (MCLR) by 10-15 basis points across all tenors from March 10. This was the 10th consecutive cut in MCLR in the current financial year.

One year MCLR will be 7.75 per cent against previous rate of 7.85 per cent. MCLR was 8.5 per cent in April 2019.

Consequently, equated monthly instalments (EMIs) on eligible home loan accounts (linked to MCLR) will get cheaper by around Rs 7 per Rs 1 lakh on a 30-year loan. EMIs on car loans will also be reduced by Rs 5 per Rs 1 lakh on a seven-year loan.

Keeping adequate liquidity in the system, the bank has realigned interest rates on term deposits with effect from March 10. Besides the 50-basis points (bps) cut on short-term deposits (7-45 days), it reduced the rate for one-year and above tenors by 10-basis points.

Now, deposits in the 7-45 days bucket will have a rate of 4 per cent rate against the old rate of 4.5 per cent. The retail term deposit for one year and above will carry a rate of 5.9 per cent against 6 per cent. The rate on one-year deposits are down 110 basis points since May 2019 when the rate was 7 per cent.  

For bulk term deposits, interest rates have been reduced by 15 bps for deposits for 180 days & above tenors.

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