SBI cuts interest rate on savings accounts to 3%; no minimum balance required now
New Delhi: SBI on Wednesday cut interest on savings bank accounts to 3 per cent and also waived minimum balance requirement, as it set the trend of lowering interest rates in the banking sector.
The country's largest lender has 44.51 crore savings bank (SB) accounts.
More banks are likely to follow the market leader in slashing interest rate on SB accounts and waiving minimum balance requirements.
Earlier in the day, State Bank of India (SBI) reduced its fixed deposit rates and marginal cost of funds-based lending rates (MCLR) for various tenors.
"The decision by @TheOfficialSBI to remove minimum balance requirement in its savings accounts will immensely help middle class and poor and improve ease of living," Finance Minister Nirmala Sitharaman said in a tweet.
Keeping in mind the 'Customers First' approach, the bank said it has also waived SMS charges, which will bring significant relief to all the customers.
"Bank has also rationalised interest rate on SB Account to a flat 3 % p.a. for all buckets," it said in a statement.
Currently, the interest rate on SB accounts is 3.25 per cent for deposits up to Rs 1 lakh in SB accounts, and 3 per cent for deposits above Rs 1 lakh.
SBI said it has decided to waive maintenance of Average Monthly Balance (AMB) for all SB accounts.
"The charges on maintaining AMB are now waived off on all 44.51 crore SBI savings bank accounts," it said.
Currently, SBI customers need to maintain AMB of Rs 3,000, Rs 2,000 and Rs 1,000 in metro, semi urban and rural areas, respectively.
The bank used to levy a penalty of Rs 5 to Rs 15 plus taxes on non-maintenance of AMB.
Minister for Textiles, and Women and Child Development Smriti Irani in a tweet said: "SBI's decision to waive minimum balance requirement in savings account will further encourage inclusive banking opportunities especially for the poor."
"A big step towards strengthening PM @narendramodi Ji's clarion call for Sabka Saath, Sabka Vikas, Sabka Vishwas," she added.
SBI had introduced penalty on breach of minimum balance in SB accounts in April 2017 after 2012. However, later in October it slashed the penalty amount.
Making it the second reduction in as many months, the public sector bank reduced interest rates for retail term deposits (less than Rs 2 crore) by 10 to 50 basis points for a few tenors.
Fixed deposits (FDs) maturing between 7 days to 45 days will offer an interest rate of 4 per cent as against 4.50 per cent earlier.
Interest rates on FDs maturing in one-year and above have been reduced by 10 basis points.
One-year to less than two-year tenor FD will earn an interest rate of 5.90 per cent against 6 per cent earlier.
FD for similar tenor will fetch an interest rate of 6.40 per cent instead of 6.50 per cent for senior citizens.
The bank has also reduced interest rates on bulk term deposits (Rs 2 crore and above) by 15 basis points for 180 days and above tenors.