SBI increases interest rates on fixed deposits effective May 15

Here's some good news for those who have fixed deposits with SBI. On May 15th SBI raised the interest rate for fixed deposits of certain maturities by 0.25%-0.75%. This targets FDs below Rs 2 crore.

Interest rate hike

The increase in interest rates are applied across various tenures including FDs maturing within 46 days to 179 days, 180 days to 210 days and 211 days to less than 1 year. For deposits maturing in 46 days to 179 days the interest rates would see 75 bps increase. These deposits now fetch interest rate of 5.5%. Likewise for 180 days to 210 days, the bank has raised rates by 25 bps to 6% interest.

Fixed deposits ranging from 211 days to less than 1 year will yield increased interest rate of 6.25% after a 25 bps hike.

Repo rate unchanged

This comes as the Reserve Bank of India kept its repo rate unchanged for the seventh time at 6.5% in April 2024. However, the central bank earlier implemented six consecutive rate hikes, totalling 250 basis points, until the pause in April 2023.

In October 2023, RBI governor Shaktikanta Das emphasised that while the repo rates have been raised by 250 basis points the increase has not been fully transmitted to bank deposit rates. Although banks followed suit in raising their FD interest rate when RBI increased the repo rate, there was some delay in the transmission.

Banks that delayed increasing the FD rate are increasing them to catch up with the RBI's policy actions. When RBI increases the repo rate, banks increase FD interest rate and when the repo rate is cut, the FD interest rate is cut too

Also Watch: RBI Credit Policy: Repo rate unchanged at 6.5% for 7th time in a row