The State Bank of India (SBI) has implemented a significant change in its fixed deposit interest rates, marking a notable development for investors. The adjustment affects various tenors, impacting retail term deposits below Rs 2 crore.
For shorter durations, specifically maturing between seven days to 45 days, SBI has raised the interest rates by a substantial 50 basis points. This increase brings the rate to 3.5%, up from the previous 3%, with senior citizens benefiting from an even higher rate of 4%.
Moving on to fixed deposits with a maturity period of 46 days to 179 days, the interest rate has been raised by 25 basis points, now standing at 4.75% from the earlier 4.5%. Senior citizens can enjoy an enhanced rate of 5.25%.
The trend continues for deposits maturing between 180 days to 210 days, with the new rate set at 5.75%, up from 5.25%. Senior citizens, in this case, receive an increased rate of 6.25%.
For deposits maturing between 211 days to less than one year, SBI has adjusted the rate to 6%, a rise from the previous 5.75%. Senior citizens in this category are entitled to a higher rate of 6.5%.
Term deposits maturing between three years to less than five years see a 25 basis points increase, setting the new rate at 6.75% compared to the earlier 6.5%.
It’s noteworthy that SBI has maintained the interest rates on fixed deposits maturing between one year to less than two years, two years to less than three years, and five years up to 10 years at 6.8%, 7%, and 6.5%, respectively.
Furthermore, SBI has also made adjustments in interest rates for domestic bulk deposits of Rs 2 crore and above, with an increase of up to 50 basis points, effective December 27.
This move by SBI follows its recent raise in the marginal cost of fund-based lending rate (MCLR) by 5-10 basis points across various tenors. The MCLR is a crucial benchmark reflecting the minimum interest rate at which banks can lend.
As the Reserve Bank of India (RBI) has increased the repo rate by 250 basis points since May 2022, banks are adjusting their rates accordingly. While the full transmission of this increase to deposit rates is yet to occur, SBI’s recent changes align with the evolving interest rate landscape.
Investors and account holders should stay informed about these rate adjustments, especially if they are considering fixed deposits as part of their investment strategy.