The State Bank of India (SBI) has announced a reduction in interest rates on select fixed deposits (FDs) and has revised its lending benchmarks. The changes, which are set to take effect from December 15, follow the recent 25-basis point cut in the central bank’s policy rate.
The policy rate reduction has led to lower yields on loans linked to external benchmarks, consequently reducing interest income for banks. SBI’s decision to adjust both deposit and lending rates is an effort to manage this impact and protect its net interest margins.
Key Rate Changes
- 444-Day Fixed Deposit: The interest rate on this popular tenure has been reduced to 6.5 per cent from the previous 6.6 per cent.
- 2 Years to Less Than 3 Years:
- The rate has been cut to 6.4 per cent from 6.5 per cent.
- For senior citizens, the rate has been lowered to 6.9 per cent from 7.0 per cent.
Unchanged Rates
The bank has chosen to leave the interest rates unchanged for:
- Short-term deposits: Tenures ranging from seven days to less than one year.
- Long-term deposits: Tenures of three years and above.
This move by SBI comes amid a continued trend where credit growth is outpacing deposit growth. As of late November, bank lending had risen by 11.5 per cent year-on-year, the fastest rate since April 2025, while deposit growth remained comparatively slower.