A Surprise Move by SBI: Interest Rate on Saving Bank Reduced

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  • India’s Largest Bank, SBI announced reduction in Saving Bank interest rate from 4% to 3.5% on balance below 1 Crore.
  • 90% of the Saving Bank Deposit Accounts have balance below 1 Crore
  • SBI has over 9 Lakh Crores of Balance in Saving Bank, which may help to save 4500 Crores in the form of interest
  • Banker felt the need to either reduce Saving Bank ROI or raise MCLR to save margins
  • Other Banks may follow SBI as cost of funds is high
  • Some Banks may not reduce the rate so as to attract deposits
  • Impact of this reduction shall have long term effects
  • Share of SBI was up by nearly 5 % after this move at BSE/NSE

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