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SBI cuts retail term deposit rates by 25 bps

Term deposits for 1-3 years and 3-5 years has been lowered to 8.5 percent from existing 8.75 percent, while for 5 years and above it has been reduced to 8.25 percent from current 8.50 percent.

India’s largest public sector lender  State Bank of India  (SBI) has cut interest rates of three retail term deposits below Rs 1 crore by 25 basis points with effect from December 8. The move comes a day after two private sector banks –  ICICI Bank and  HDFC Bank – cut up to 0.50 percent in maturities of up to one year.

Term deposits for 1-3 years and 3-5 years has been lowered to 8.5 percent from existing 8.75 percent, while for 5 years and above it has been reduced to 8.25 percent from current 8.50 percent.

The above rates will also be applicable to NRE deposits for tenors of one year and above. This is the second time that SBI has chosen to cut deposit rates in the past 8-10 weeks.

However, the bank is not sure if it will at all lower lending rates anytime soon. VG Kannan, MD, SBI, says: “The liquidity is quite adequate in the system and therefore we felt that paying higher interest doesn’t make sense and many of the large high value corporates have been accessing the market at much lower rate.”

Below is the verbatim transcript of VG Kannan’s interview with Latha Venkatesh on CNBC-TV18.

Latha: Now that you have chosen to cut deposit rates twice in the past eight-ten weeks, would we hear of a lending rate cut sometime soon? When?

A: I cannot give the exact timeframe. We are actually looking at what benefit we will get from lowering the rate. The liquidity is quite adequate in the system and therefore we felt that paying higher interest doesn’t make sense and many of the large high value corporates have been accessing the market at much lower rate. Therefore, with a result that taking deposits at higher rates does not make sense any longer and other banks have also started reducing the deposit rates and inflation has also started showing a decline, maybe we will have to wait and watch for few months and the base rate maybe cut in due course but as of now nothing right now.

Stay tuned for more…

SBI stock price

On December 05, 2014, at 14:10 hrs State Bank of India was quoting at Rs 318.45, down Rs 1.8, or 0.56 percent. The 52-week high of the share was Rs 2977.85 and the 52-week low was Rs 291.05.


The company’s trailing 12-month (TTM) EPS was at Rs 15.70 per share as per the quarter ended September 2014. The stock’s price-to-earnings (P/E) ratio was 20.28. The latest book value of the company is Rs 158.43 per share. At current value, the price-to-book value of the company is 2.01.

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