SBI trims FD rates by 10bps after RBI cut

By Admin

15 Apr, 2025

The State Bank of India (SBI), India’s largest lender, has adjusted its fixed deposit (FD) rates in response to the Reserve Bank of India's (RBI) recent monetary policy action. Following the central bank’s decision to reduce the repo rate by 25 basis points, SBI has revised interest rates on select deposit tenors, trimming them by 10 basis points. This development signals a gradual easing in the cost of funds, with implications for both savers and borrowers.

Deposit Rate Adjustment Across Select Tenors

Effective from April 15, SBI has revised the FD interest rates for two specific tenors:

• 1 year to less than 2 years:
  
  

• General public: reduced from 6.8% to 6.7%
  
  

• Senior citizens: reduced from 7.3% to 7.2%
  
  

• 2 years to less than 3 years:
  
  

• General public: reduced from 7.0% to 6.9%
  
  

• Senior citizens: reduced from 7.5% to 7.4%
  
  

All other deposit maturities remain unchanged at the rates set on June 15, 2024. Additionally, SBI’s special Amrit Vrishti 444-day deposit scheme will continue, albeit with a revised rate of 7.05%, down from 7.25%.

Impact on Lending Rates and Borrowers

While FD rates have been reduced, SBI has also brought down its External Benchmark Linked Lending Rate (EBLR) by 25 basis points, aligning it with the latest repo rate cut. This move directly benefits retail borrowers as EBLR-linked loans—including home loans, auto loans, and personal loans—will now carry lower interest rates. However, lending rates linked to the Marginal Cost of Funds-Based Lending Rate (MCLR) remain unchanged for now, as the bank's overall cost of funds hasn’t dropped significantly.

Industry-Wide Implications

SBI’s rate revision is expected to set the tone for other public sector banks, pushing them to re-evaluate their deposit and lending rates. In fact, HDFC Bank recently reduced its savings account rates by 25 basis points, and Bank of India withdrew its Special Deposit Scheme, reflecting a broader trend in the sector.

Monetary Transmission on Track

Unlike the RBI’s February rate cut, which didn’t fully transmit to deposit and lending rates due to tight liquidity, the latest action is seeing better transmission. With liquidity now abundant, overnight market rates are nearing the reverse repo rate, improving the efficiency of monetary policy and making it easier for banks to adjust their rates.

Conclusion

SBI’s modest FD rate cut and EBLR adjustment reflect a cautious but clear effort to align with RBI’s monetary policy while managing its funding costs. For depositors, returns on some tenors are slightly lower, but borrowers stand to benefit through cheaper loans. As the banking system adjusts to improved liquidity conditions, further rate changes across banks may follow, ensuring a smoother transmission of policy benefits to the economy.