State Bank of India Chairman O P Bhatt REUTERS
It also extended the tenure of its popular home loan scheme till March 31, 2010. The fresh cut in deposit rates is being seen as a trade-off for extending the tenure of the home loan scheme.
A senior SBI official said, "Though RBI (Reserve Bank of India) signaled the end of its easy monetary policy, it did not increase policy rates. We do not expect the rates to rise at least till March 2010. In fact, they could dip slightly. The system is flush with resources, which provides us room to slash deposit rates and also extend the tenure of the home loan scheme, which is giving business."
The new deposit rates will be effective from November 9. This is the eighth cut in deposit rates by SBI in the current financial year. The steepest drop in rate (of 185 basis points since April) has been for deposits with tenures of one year to less than two years. The new rate for this segment is 6.25 per cent.
The lender's cost of funds has come down to 6.06 per cent from 6.30 per cent at the end of March 2009. The bank has brought down the share of high-cost bulk deposits in total deposits to 3.6 per cent in September 2009 from 16.82 per cent a year ago.
