The largest lender, State Bank of India has revised down its fixed deposit rates under four time slabs. The interest rates on fixed deposits ranging between one year and three years have been cut by 40 to 50 basis points.
On deposits with maturity ranging between one year and less than two years, the bank has reduced interest rates by 40 basis points to 8.10% where as deposits for time period between two years and 1,000 days will now earn an interest rate of 8.5% as compared to 9% earlier. The 1,000 days FD scheme was launched by the bank in September 2008 and since then it has mopped up funds worth Rs 1,000 crore daily.
Similarly, the fixed deposit rate for above 1,000 days and less than three years maturity has been lowered by 50 basis points to 8.25% from 8.75%.
The revised of the bank are effective from March 9th. At the same time, fixed deposits with other maturities remained unchanged by the bank.
Meanwhile SBI has raised the interest rates on foreign currency non-resident (FCNR) and non-residential external (NRE) deposits with effect from March 1st.
The FCNR (B) deposits in US dollar have been raised by 12 to 21 basis points across various maturities. The interest rate in one to less than two-year category has moved up to 3.12% from 2.98% and the five-year deposits carry higher rate across various maturities at 3.66% as against 3.45% earlier. However the interest rates on Euro deposits have been cut by 16 to 24 basis points and those on NRE (Rupee) deposits are increased by 12 to14 basis points.
NRE (Rupee) deposit with one year to less than two years maturity will now earn a rate of 3.97% against 3.73% earlier. The three to five year category will carry a revised at 3.82% from 3.68%.
SBI reported that inflow in NRE deposits during the first three quarters of the current fiscal stood at $1,286 million against $960 million, a year ago. Even the non-resident ordinary rupee account (NRO) inflow rose to $1,964 million from $400 million during the period under review.
Explaining the reason for a sharp rise in NRO deposits, an executive from SBI said, "The remittances have grown. There is shift in preference of NRIs. People prefer to keep deposits in rupee as they wish to minimize exposure to volatility in international markets."