The State Bank of India on Monday introduced a new two-tier savings account interest rate system, slashing the interest rates on savings bank deposits by 0.5%, NDTV reported. Accounts with balance of less than Rs 1 crore will now earn 3.5%, compared with 4% earlier. Accounts with balance of more than Rs 1 crore will continue to earn 4%. The new interest rate system will come into effect from July 31.
“The decline in the rate of inflation and high real interest rates are the primary considerations warranting a revision in the rate of interest on savings bank deposits,” SBI said in a statement.
SBI said the revision in savings bank rates would enable it to maintain the marginal cost of funds-based lending rate or MCLR at existing rates. This will benefit a large segment of retail borrowers in small and medium-sized enterprises, medium enterprises, agriculture and affordable housing segments, it added.