InvestorQ : Why has SBI cut the rates of interest on savings deposits? What does that mean for depositors?
Sam Eswaran made post

Why has SBI cut the rates of interest on savings deposits? What does that mean for depositors?

Answer
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swati Bakhda answered.
5 months ago


SBI has cut rates on savings deposit accounts by 25 bps from 3% to 2.75%. These rates are normally not linked to the market repo rates but the liquidity in the system. With the liquidity abundant in the system and the CRR rates also being brought down by the RBI, the bank does not see the reason to keep savings rates at current levels. Also the case of Yes Bank has highlighted that customers will not be carried by higher rates offered on savings bank accounts any longer. SBI and other banks need to reduce the rates on deposits to bring down their cost of funds and only then they will be able to pass on the lower repo rates to the end customer. That is the only way transmission of rate cuts will actually happen. This is an important step considering the huge CASA deposit base of SBI.