The country’s largest bank, State Bank of India (SBI), has great news for customers. From the month of May, the rules of interest on Saving Accounts in SBI are going to change. The bank has added interest rates on its deposits and loans to the Reserve Bank of India (RBI) benchmark rate. With this new decision, deposits and loan rates of more than one lakh rupees have been linked to the repo rate. It is clear that RBI’s repo rate changes will affect the bank’s deposit rates. That’s why SBI has made changes in the savings rate from next month.
These rules will change from May 1
Balance of up to Rs 1 lakh will now be available at a 3.5% rate. At the same rate, the rate of interest on the bank’s over 1 lakh will be 3.25 percent. This new rate will be applicable from May 1, 2019.
SBI has linked all the cash credit and overdraft accounts above Rs 1 lakh to the repo rate. In view of this, the bank has cut the interest rate by 0.25 percent recently by the Reserve Bank.
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Long time people had complained that after RBI’s interest rate reduction, the bank’s interest rate did not show its effect. That’s why SBI will remove customer complaints. Bank chairman Rajneesh Kumar has said that loans and deposits below Rs 1 lakh will remain linked to MCLR ie Marginal cost of funds based lending rate. This has been done to protect the small customers from the market volatility.
How will the rates determine
The country’s largest bank has said that all Savings Bank deposits and short-term loans of more than Rs 1 lakh will be linked to RBI’s benchmark repo rate from May. The repo rate is now 6%. RBI lends itself to banks at the repo rate, while the savings bank rates will be 2.75 percent lower than the repo rate. At the same time, the repo rate on short-term loans of more than Rs 1 lakh will be kept 2.25% more interest. This is the first time that the bank has linked the savings, small loans, and deposit rates directly with the repo rate.