SBI Cuts Rates For Most Savings Bank Accounts

State Bank of India, the country's largest lender, on Monday (31 July) introduced a two-tier interest rate structure for its savings bank accounts, reducing interest rates for most of its depositors.

Accounts with a balance of Rs 10 million ($155,994.07) and less will earn 3.5 per cent per annum effective July 31, while those above Rs 10 million will continue to earn 4 per cent per annum, the bank said in a statement.

About 90 per cent of SBI's savings accounts have balances under Rs 10 million.

"The decline in rate of inflation and high real interest rates are the primary considerations warranting a revision," SBI said.

The revision would enable the bank to maintain its marginal cost of funds-based lending rate (MCLR) at existing rates, the lender added.

The bank's overnight MCLR rate, effective July 1, currently stands at 7.75 per cent.

Shares of the bank spiked after the announcement, climbing as much as 4.75 per cent.

($1 = 64.1050 Indian rupees)

(Reuters)