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A surge in deposit money flows has led State Bank of India (SBI) to drastically cut rates for bulk deposits (Rs 1 crore to Rs 10 crore) by up to 1.9 per cent across tenors (seven days to 10 years).
This may not impact the retail deposits yet, but it could signal a markdown in the overall cost of funds for the bank, forcing a review of the Marginal Cost of Funds-based Lending Rate (MCLR) soon.
This in turn is expected to lead to a cut in lending rates for the common man, banking sources said here. The flip side is that savers should be ready to take a hit.
Earlier, Prime Minister Narendra Modi had observed that "the rates are on the way down'', apparently taking a cue from the surge in deposits after he announced demonetisation of high-value notes on November 8.
On Sunday, he had said that over Rs 5 lakh crore deposited with the banks are not going to be kept idle. "Banks would have to provide loan for all sorts of economic enterprise....for which they would have to bring down the interest rates.''
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