SBI to lower FD rates but keep savings unchanged, says Setty

STATE BANK OF India (SBI), the country's largest public lender, will refrain from cutting its savings account interest rates despite the ongoing trend of declining interest rates, chairman CS Setty told analysts.

- SACHIN KUMAR Mumbai, May 4

However, the bank, which has a customer base of 523 million, will lower fixed deposit (FD) rates to provide some cushion to its net interest margins (NIM), which is likely to come under pressure due to expected repo rate cuts by the Reserve Bank of India (RBI) in the coming quarters.

"There is no plan to cut the savings bank rate any further. Broadly we believe the rate has stabilised at this level," said Setty. "But there will be some readjustment in the FD rates going forward." He added that while some banks have recently reduced savings account rates, they had the flexibility to do so as they were previously offering relatively higher interest.