SBI Reduces Interest On Saving Account, Rs 30 Lakh Crore Of Deposits Will Be Impacted: 5 Facts You Should Know
As we had previously informed you that the country’s largest lender State Bank of India, SBI had up with reformed service charges, applicable from October 1, 2019. One such major highlight among these reformations was the reduction of charges levied on non-maintenance of Monthly Average Balance (MAB) by nearly 80%, allowing free transactions to its customers at ATMs for 8-10 times in a month.
It had also announced reducing its home loan rates by 20 basis points. Its MCLR reduced from 8.45% p.a. to 8.40% p.a. for 1 year. Now, the national lender has announced to fetch lower interest rates on its savings account deposits, effective from November 1.
SBI Reduces Interest Rates on Savings Account
India’s biggest bank had announced the rate revision earlier this month. Balances of less than ?1 lakh in savings deposits with SBI will fetch 3.25%, as compared to 3.5%, from November 1.
If you have a Savings account in the bank, here are 5 major points you should know about the interest rates which may directly affect you.
- SBI has cut interest rate on fixed deposits on select maturities with effect from 10th October, 2019. The RBI too has lowered its benchmark interest rate by a combined 135 basis points this year and has constantly been taking measures to improve liquidity in the banking system.
- While talking of savings account with balances above ?1 lakh, SBI will maintain its interest rate on such accounts at a constant of 3% p.a.
- As a matter of fact, SBI was the first bank in India to link savings account rates on large balances to the RBI‘s repo rate when it rolled out the new mechanism in May 1.
- The interest on savings accounts with balances above ?1 lakh was kept 275 basis points below RBI’s repo rate, with a minimum of 3% for the entire balance.
- It had also linked borrowing rate on cash credit accounts and overdraft facilities with limits above ?1 lakh to the RBI’s repo rate.
- As a result of RBI cutting down its repo rate for banks, SBI lowered interest rate on savings account balances above ?1 lakh to 3%. It has however, kept this rate unchanged.
- Also, under Section 80 TTA of the Income Tax Act, the savings account interest up to ?10,000 a year is tax free. This means senior citizens can enjoy a higher limit of ?50,000.