State Bank of India has snipped interest rates by 25-50 basis points on deposits up to five years duration.
This is the second time in as many months that India’s biggest bank has cut term deposit rates.
Last month, the bank had reduced term deposit rates by 25 basis points across all maturities.
The latest round of interest rate-cuts on term deposits is effective from November 9. SBI, however, has left interest rates on long-term deposits in two maturity buckets — 5 years to less than 8 years (7.25 per cent) and 8 years and up to 10 years (7.50 per cent) — unchanged. Even as it cut term deposit rates, the bank announced extension of its 8 per cent home loans campaign up to March 31, 2010 following good response to the scheme.
The bank has grown its home loans portfolio by 15 per cent from Rs 54,063 crore as of March-end 2009 to Rs 62,338 crore as of September-end 2009.
According to analysts, SBI may have pared term deposit rates to protect its net interest margin in the face of sluggish credit pick-up and liquidity glut arising from heavy inflow of retail term deposits, which on an average increased by Rs 8,075 crore a month in the first six months of the fiscal.
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