SBI hikes savings deposit rate by 30bps

Mumbai: A day after lowering the deposits for small savers (under Rs10 crore in savings deposits by 5 bps to 2.70 per cent per annum), the nation's largest lender State Bank of India (SBI) on Tuesday increased the savings deposit rates by 30 bps for large accounts.

The bank said the new pricing of 30 bps more on deposits, is applicable for Rs10 crore and above, and is effective from October 15. Banks have been witnessing flight of money to other asset classes even as they were lending more.

For many months, deposit growth has not been keeping pace with credit growth which in the first half averaged at 14.8 per cent while deposits have been much lower at 9.5 per cent only. In the past many years, deposits have been growing in high single digits but credit has been negative or in low single digit.

While interest rates for saving bank deposits below Rs 10 crore remains unchanged at 2.70 percent, down 5 bps, those Rs 10 crore or above will attract 30 bps more at 3 per cent, SBI said. As of June 2022, the bank has a deposit base of over Rs 40.46 lakh crore with the Casa ratio of 45.33 and advances of over Rs 29 lakh crore. The bank commands a market share of 33.3 per cent (at over Rs 6 lakh crore in outstanding) and 19.3 per cent in home loans and auto loans, respectively.

The bank on Monday also increased the lending rates (marginal cost of funds based lending rates or MCLR) 7.95 per cent, up by 25 bps from previous rate, which came to effect from October 15, for the benchmark one-year tenor, which is the rate against which most of the consumer loans are tied to. SBI has also raised the two- and three-year tenor MCLRs to 8.15 per cent and 8.25 per cent respectively from 7.90 per cent and 8 per cent.

The overnight, one-, three- and six-month rates have been raised in the range of 7.60-7.90 per cent. Both the rate hikes are following the RBI increasing the key repo rate for the fourth time in a row this fiscal by another 50 bps to 5.90 per cent, taking the cumulative increase by 190 bps since May.