State Bank of India, the country’s largest lender, on Monday introduced a two-tier interest rate structure for its savings bank accounts, reducing interest rates for most of its depositors.
Accounts with a balance of 10 million rupees ($155,994.07) and less will earn 3.5% per annum effective July 31, while those above 10 million rupees will continue to earn 4% per annum, the bank said in a statement.
About 90% of SBI’s savings accounts have balances under 10 million rupees.
“The decline in rate of inflation and high real interest rates are the primary considerations warranting a revision,” SBI said.
The revision would enable the bank to maintain its Marginal Cost of funds-based Lending Rate (MCLR) at existing rates, the lender added.
The bank’s overnight MCLR rate, effective July 1, currently stands at 7.75%.
Shares of the bank spiked after the announcement, climbing as much as 4.75%.
($1 = 64.1050 Indian rupees)