Mumbai: Country's largest lender State Bank of India on September cut its interest rate offering for medium-term deposits by 0.25 per cent to 8.75 per cent, citing slower-than -expected pick up in advances.
However, it increased rates for shorter tenor deposits of 180-210 days by 0.25 per cent to 7.25 per cent per annum. "In view of abundant liquidity coupled with slower-than- anticipated credit pick up, State Bank of India (SBI) has decided to cut the deposit rates by 0.25 per cent to 8.75 per cent," the bank said in a statement.
The downward revision of rates is for deposits between one and three years and is applicable from September 18, it said. The bank added that with the inflation trending down — consumer price inflation for August eased to 7.80 per cent — the rate of adjustment will continue to ensure that the depositors are compensated "adequately with a positive real rate on their deposits."
It can be noted that banks have been complaining about issues in credit offtake, even as the sentiment has improved following the formation of a stable government at the Centre. The system's year-on-year increase in credit stood at 10.94 per cent for the fortnight ended August 22, which is almost at par with the 10.61 per cent observed in 2009 in the aftermath of the financial crisis.
