SBI Hikes Short-Term FD Rates Upto 75 Basis Points
In a recent development, the State Bank of India (SBI) which is the largest bank in the Indian public sector has announced that it will be increasing interest rates on reputably safe and liquid short-term retail FDs. The bank has enhanced interest rates on retail Fixed deposits below 2 Crore. Interest existing on retail fixed deposits maturing between 7 days and 45 days, will be affected by the new interest rates that will be applicable to them. Interest rates on identical deposits are now varied from 3.50% to 5.50% for the general public who decide the deposit period. Then the rates used to be around 3% and 5%.
SBI has taken the step after the RBI raised the repo rate. The primary goal of SBI with its short-term FD rate hike is to enhance the inflow of retailer savings. In addition, SBI would utilize this to keep the liquidity and flush credit at a higher rate as the growth in deposits has been delayed chronologically. Nevertheless, the SBI has left the rates on longer-term FDs of 1-2 years unchanged as compared to the savings deposits.
According to a senior SBI official, the rate action was meant to meet the credit demand requirement which remains strong. “While the current conditions of the market, like liquidity, have been considered, the decision also reflects a view on interest rate trajectory,” the official said.
Rate hikes would be limited only to short-term fixed deposits, which means the interest rates for such deposits will soften up from the latter period of the financial year.
