Financial Daily from THE HINDU group of publications
Thursday, Mar 28, 2002
Money & Banking - Interest Rates
SBI cuts PLR 50 basis points -- Deposit rates reduced by 25 points
MUMBAI, March 27
NEARLY a month after the Finance Minister reduced the small savings rate by 50 basis points in the Union Budget, State Bank of India (SBI) on Wednesday slashed its lending and deposit rates.
The prime lending rate (PLR) of SBI has been cut by 50 basis points to 11 per cent from 11.50 per cent. The medium-term lending rate has been reduced to 11.50 per cent from 12 per cent. The reduced interest rates are effective April 1.
The bank has withdrawn its short-term prime lending rate for maturities up to 180 days and has decided to have one short-term prime lending rate for maturities less than one year at 10.50 per annum.
The Chairman of SBI, Mr Janki Ballabh, said "The cut in the lending and deposit rates is based on the bank's own evaluation of its asset liability requirements and the current trends in interest rates.''
Despite clear signals from the RBI and the Government in the past few months, banks had been showing a marked reluctance to bring down their lending rates. Even though the RBI had signalled a lower interest regime by cutting bank rate by 50 basis points in October last year, lending rates had remained unchanged. However, deposit rates had witnessed a drop.
It was only after the reduction in small saving rates and the cut in the repo rate in early March, that banks started trimming their lending and deposit rates. The cut in SBI's lending and deposit rates follows recent cuts made by two other banks Union bank of India and Central Bank of India.
Another leading public sector bank Bank of India on Wednesday decided to lower its deposit rates by 25-50 basis points but has kept its PLR unchanged at 12 per cent.
To ensure its asset liability management, SBI has also lowered deposit rates by 25 basis points across the board.
On domestic term deposits of less than Rs one crore, for a duration of 15 to 45 days the rate of 5 per cent (5.25 per cent); for 46 to 179 days- 6 per cent (6.25 per cent); for 180 days to less than on year 6.25 per cent (6.50 per cent); for one year to less than two years 7 per cent (7.75 per cent); for two years to less than three years, 7.50 per cent (7.75 per cent) and for three years and above, 8 per cent (8.25 per cent). On domestic term deposits of Rs one crore and above, the rates have been cut by 25 basis points. For a duration of 15 to 45 days, the rates are 5.50 per cent; for 46 to 179 days 6.50 per cent; for 180 days to less than one year 6.50 per cent; for one year to less than two years 7 per cent; for two years to less than three year 7.50 per cent and for three years and above 8 per cent.
For a maturity period of 7 to14 days deposit rates have been cut by 25 basis points to 4.5 per cent on deposits of Rs 15 lakh to less than Rs 1 crore and 5 per cent on deposits of Rs one crore and above.
On deposits of senior citizens, for duration of one year to less than two years, the rate is 7.75 per cent (8.50 per cent), for two years to less than three years, 8.25 per cent (8.50 per cent) and for deposits of three years and above 8.75 per cent (9 per cent).
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