Sbi Savings Interest Rates

Savings account holders with the country’s largest lender State Bank of India (SBI) will now earn an interest of 2.75 percent effective from April 19. With interest rates being slashed twice in two months, it is the lowest ever return offered by any Indian banks for its savings account. Amidst a pandemic, the falling interest rate for savings accounts is becoming a concern, as taking the cue from SBI, other banks might also follow suit.

The trigger for the second cut within a month

State Bank of India (SBI) offers interest rates which are 3.5 per cent for an amount less than ₹ one crore. On the deposits above ₹ one crore, the interest rate stands at 4 per cent. Monthly Interest Payment. Savings Account. Below are the current interest rates we pay on our range of variable and fixed deposit savings accounts as at 1 st June 2017. SBI Savings Account Interest Rates. Account Details APY Updated; SBI Savings Account: 4.00%. Q: If I would like to save 500000 thousand.

Following the Reserve Bank of India (RBI) declaration of 75 basis points repo rate cut as a COVID-19 rescue package last month, SBI announced a 25 basis point cut in its savings account interest rate to 2.75 from existing 3 percent. This was in fact the second interest rate cut for SBI saving accounts. Earlier on March 11, the rates were brought down from 3.25 to 3 percent for savings accounts with the balance above Rs 1 lakh. For this, the bank had explained that it does not need to incentivize customers with the extra rate of interest for deposit inflow as it already has enough liquidity. The real explanation, however, is due to RBI’s liquidity easing measures, banks are forced to cut lending rate, hence they wanted to make up the losses by bringing down the deposit rates.

Savings account interest rate revision in the past

The new savings deposits interest rates will be effective from November 1, 2019. SBI has cut interest rates applicable to retail term deposits and bulk term deposits by 10 and 30 basis points. Interest on all other type and currencies of deposits shall be paid purely on Bank’s discretion. Interest Rates on Loans & Advances. A- Corporate Loans & Advances. We offer competitive rates on corporate loans & advances linked to AWPLR for LKR currency and linked to LIBOR for USD currency.

Sbi Bank Rate

As a part of financial sector reform, the RBI, in 2003, deregulated interest rates on deposits, other than savings accounts. The interest rate for savings deposits (fixed by RBI) between March 2003 and May 2011 remained 3.5. Finally, in 2011, individual banks got the power to determine their saving bank deposit interest rates, under two conditions:

• Each bank will have to offer a uniform interest rate on savings bank deposits up to Rs 1 lakh
• However, for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses

Following this, most major banks have been paying a 4 percent interest rate to its savings account holders.

However, for the first time ever since deregulation, SBI slashed its savings account interest rate to 3.5 percent in July 2017 triggered by demonetization and also falling inflation and real rate recovering.

Falling Savings Account Interest Rates

Your cash in the bank account will now give negative inflation-adjusted returns.

With the interest at 2.75% and the annual inflation hovering at around 4%, the real returns you are getting now are actually negative. Forget about it growing, your money is now losing its value sitting in the bank account.

So if you are still keeping any cash apart from what you need for your regular expenses like paying bills etc., you are making a loss. But it doesn’t have to this way.

SmartDeposit as an alternative to a bank account

While we all cannot afford to let go of a savings account, we can make sure all the extra cash we have like an emergency fund or the money we don’t need in the next 7 days is not losing its value. And there is a solution that allows you to do that at almost zero risks.

That solution is ETMONEY SmartDeposit. Here are some key reasons why-

1. Low Risk – There is almost negligible risk of you incurring any loss. That’s because you are putting money in a liquid debt fund, which are the safest mutual funds.
2. FD-like returns with no lock-in or penalty – While there is no guarantee of returns, SmartDeposit 1-year returns are 6.24%. That’s similar to FD of similar duration will give. Plus there is no lock-in and you don’t pay any penalty if you redeem after 7 days
3. Bank Account like liquidity with Instant Redemption – With SmartDeposit, you can get instant access to your money. Just tap and money comes into your account. Be it a holiday or the middle of the night.

Bottom line:

With banks flush with cash due to government push to infuse liquidity in the system, banks have little or no incentive to pay a higher interest rates to retail investors. Due to this, interest rates are expected to stay low for quite some time. So, move your money to ETMONEY SmartDeposit today. And if you are someone who hasn’t build an emergency fund, it is a good idea to begin now and SmartDeposit is the perfect place due to reasons we mentioned earlier.

You can download ETMONEY to invest with Smart Deposit, which is the smartest way to invest in liquid funds.

SBI has made a very significant change in its Saving Account Interest Rate for balance of more than Rs 1 Lakh. It has linked the saving account interest rate and short-term loans to RBI Repo Rate. For those who are not aware, Repo Rate is the rate at which RBI gives loans to banks. The change is effective from May 1, 2019.

Sbi Savings Interest Rates 2019

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Why SBI linking of Repo Rate is BIG change?

Banks in India have been very unfair about passing of interest rate change benefits to their customers. When the interest rate goes up, banks increase the interest rates on loans quickly but not so much for their deposits (like Fixed Deposits, etc). This can be solved to an extent if the loans and deposits both are linked to an external benchmark like Repo Rate. When there is any change in the benchmark the interest rates would be auto-adjusted. So SBI’s linking of Repo rate to saving account interest rate and some loans, it’s a step in right direction.

Also Read: 21 Hidden Charges in Saving Bank Account

SBI Saving Account Interest Rate:

After the change form May 1, 2019:

• SBI offers 3.5% interest on its saving account if the balance is less than Rs 1 Lakh.
• For balance of more than Rs 1 Lakh the saving account interest would be Repo Rate – 2.75%. As of date, the Repo rate is 6% and hence the interest would be 3.25%. This is lower than the small balance account.

This is first major change after the RBI had deregulated Saving account interest rates – which essentially meant that banks were free to set their interest rates. Before being deregulated every bank had to offer minimum interest of 4% on their saving account. At present most banks offer 3.5% on their regular saving account.

Along with the saving account, cash credit accounts and overdrafts with limits above Rs 1 lakh will also be linked to the repo rate, plus a spread of 2.25%.

Also Read:Which bank offers highest interest rate on savings account in India?

How does SBI action impact customers?

I think linking of deposit and loan rates to external benchmark is way to go as it makes transactions more transparent. Its more of an experimental idea and hence SBI has consciously chosen not to impact small depositors & borrowers. If this works out more banks and more products would adopt this practice.

Even after this, the bank still decides on the spread to the benchmark so today SBI decided that it would pay 2.75% less than Repo rate on savings account. Tomorrow it could easily change the 2.75% to 3%. So, the interest rates would still be in control.

Nevertheless, it’s a good move and I hope other major loans like Home, education and deposit products like FD, RD, etc are too marked to external benchmarks.

Sbi Savings Bank Interest Rates