New Delhi, June 6: The State Bank of India (SBI) will now give lower interest rates on larger saving accounts and short-term loans after the MPC (monetary policy committee) of the Reserve Bank of India of Thursday cut the benchmark repo rate to 5.75 per cent which is 25 basis points. This development comes after the SBI, from May 1, moved to a new interest rate regime under which the interest rate on savings accounts with balance above Rs 1 Lakh and short-term loans will dependent on RBI's repo rate.
In simple words, the interest rate on large SBI accounts and short-term loans changes automatically as when Reserve Bank changes its benchmark policy rate. As per SBI's new interest rate rule, on large savings accounts, India's largest bank offers an interest rate that is 275 points lower than the repo rate. RBI Cuts Repo Rate For 3rd Consecutive Time Bringing It Down From 6% to 5.75%; Home Loans & EMIs Likely to Turn Cheaper.
Since the repo rate is currently changed to 5.75 per cent, interest rates will come down to 3 per cent on deposits above Rs 1 lakh. Earlier, the interest rate stood at 3.25 per cent. SBI Leaks Details of Millions of Customers, Including Bank Balance, Online as it Forgets to Protect Server With Password.
Meanwhile, RBI on Thursday reduced its repo rate by 25 basis points to boost growth after Gross Domestic Product (GDP) growth slowed to five years low of 5.8 per cent last quarter. Retail inflation was at 2.92 per cent, staying below the medium-term target of 4 per cent.