SBI reduces savings account interest rate to 2.75%; MCLR cut by 35 bps

SBI reduces savings account interest rate to 2.75%; MCLR cut by 35 bps

The country’s largest lender, State Bank of India (SBI), announced today that it has cut interest rates on saving accounts by 25 basis points. With effect from April 15, 2020, savings accounts will earn 2.75 per cent an annum. Along with the reduction in savings deposit rates, the bank also cut marginal cost-based lending rates (MCLR) by 35 bps across all tenors. (1 basis points/bps = 0.01 per cent).

According to the SBI press release, the one year MCLR comes down to 7.4 per cent per annum from 7.75 per cent, with effect from April 10, 2020. "This is the eleventh consecutive cut in MCLR in FY 2019-20. Consequently, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by around Rs. 24.00 per 1 lakh on a 30 year loan," the press release stated.

Tenor-wise MCLR effective from 10th April, 2020 will be as under:
TenorExisting MCLR (In %)Revised MCLR (In %)*
Over night7.457.1
One Month7.457.1
Three Month7.57.15
Six Month7.77.35
One Year7.757.4
Two Years7.957.6
Three Years8.057.7
Source: SBI Website

After the reduction in rates, savings accounts with balances up to Rs 1 lakh will earn 2.75 per cent, down from 3 per cent. The same is the case with balances above Rs. 1 lakh -- they will earn 2.75 per cent a year.

Last month, SBI had cut its external benchmark based lending rate by 75 basis points, passing on its entire RBI repo rate cut benefit to its borrowers. SBI’s external benchmark linked lending rate stands at 7.05 percent while its repo linked lending rate (RLLR) now stands revised to 6.65 percent.

Last week ,private sector bank, ICICI Bank cut interest rate on savings account by 25 bps. After the cut savings account with balance below Rs 50 lakh will earn 3.25 per cent a year and an account with balance above Rs 50 lakh will earn 3.75 per cent. The new interest rates will come into effect from April 9, 2020.

No minimum balance needed for SBI savings bank accounts
Last month, SBI had waived the requirement of holding average monthly balance for savings accounts. From March month all SBI customers are getting the zero balance facility in their savings bank accounts. This, according to the SBI press release, will benefit 44.51 crore savings bank account holders.