Savings bank account holders in State Bank of India (SBI) with over Rs 1 Lakh balance will earn 0.25 per cent less interest from Wednesday (1 May) as the nation’s leading lender is linking the interest rate to repo rates, reports Times of India.
Normal SBI saving’s bank account holders will continue to get 3.5 per cent interest on deposits, but those with more than Rs 1 lakh will get 3.25 per cent. The repo rate or short-term lending rate currently stands at 6 per cent. The interest rate is paid quarterly.
As the repo rates witness a surge, so will the interest rates, and a decrease in repo rates translate into a decrease in interest rate on deposits over Rs 1 lakh in savings bank accounts.
Earlier, SBI was giving an interest rate of 3.5 per cent for deposits up to Rs 1 crore and 4 per cent for above Rs 1 crore. SBI, which controls over a quarter of banking system, currently has deposits more than Rs 10.64 lakh core as of December end.
The bank also said that the credit accounts and overdrafts with limits above Rs 1 lakh will be linked to the benchmark policy rate along with a spread of 2.25 per cent.
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