SBI customer? New savings account, short-term loan rates effective from today
SBI) has cut the interest rate on savings bank accounts with a balance over Rs 1 lakh, effective from today (May 1, 2019).
India's largest lender State Bank of India (SBI) has cut the interest rate on savings bank accounts with a balance over Rs 1 lakh, effective from today (May 1, 2019). The saving account holders with over Rs 1 lakh balance will earn "2.75 percent below RBI’s repo rate", which stands at 6 percent now.
Therefore, these customers will earn 3.25 percent interest on their savings in this account, SBI wrote on its website.
The bank has also linked short-term loans with the repo rate. SBI announced, in March, that it will link its interest rate on savings account with above Rs 1 lakh balance and short-term loans such as cash credit facility, and overdraft to RBI's repo rate from May 1, 2019. As RBI changes repo rate off and on, the interest rates on these accounts will also change time to time in tune with the apex bank's decision.
The short term loans such as overdrafts and credit accounts above Rs 1 lakh will also be linked to the repo rate, and the customers have to pay a spread of 2.25 percent, which means they have to pay 8.25 percent interest rate on their loans. The lender can also charge over and above this rate on loans based on the customers' risk profile.
SBI would offer 3.5 percent interest rate on savings account deposits of up to Rs 1 crore and 4 percent on deposits more than Rs 1 crore. However, the customers who will have less than Rs 1 lakh in their bank account will earn an interest rate of 3.50 per annum, as earlier. The customer will get a higher rate of interest when the policy rate goes up. If the policy rate goes up by 25 percent then these account holders will get 3.50 percent, which is equal to the accounts where the amount is less than 1 lakh.
RBI has lowered the repo rate by 50 basis points since the beginning of 2019. The rate cut was done with the aim to reduce the lending cost for banks.