State Bank of India (SBI), the country’s largest lender, has increased interest rates on retail term deposits by 15 to 20 basis points on several tenors, effective June 14. It has also increased interest rates on bulk term deposits by 50 – 75 basis points (bps) on certain tenors at the same time.

The interest rate on retail term deposits (below Rs 2 crore) with a 211-day to less than 1-year duration has been raised by 20 basis points to 4.60 percent, up from 4.40 percent previously.
Similarly, interest rates on retail term deposits with a tenor of one year to less than two years have been raised by 20 basis points to 5.30 percent, while rates on retail term deposits with a tenor of two years to less than three years have been raised by 15 basis points to 5.35 percent.

The lender has increased the interest rate on bulk deposits of Rs 2 crore and above by 50 basis points to 3.50 percent and 4%, respectively, in the 7-day to 45-day tenor and 46-day to 179-day tenor. Similarly, the interest rates on 180-210-day tenors, 211-day tenors, and 1 year to less than 2-year tenors have been raised by 75 basis points to 4.25 percent, 4.50 percent, and 4.75 percent, respectively.

The rise in deposit rates follows the Reserve Bank of India’s (RBI) Monetary Policy Committee’s rate action in June, when the benchmark policy rate was raised by 50 basis points to 4.90 percent. In an unexpected off-cycle meeting, the six-member rate-setting panel raised the repo rate by 40 basis points to 4.40 percent.

The institution raised the interest rate on its bulk term deposits (Rs 2 crore and beyond) by 40–90 basis points in early May, shortly after the MPC raised the repo rate by 40 basis points.

While lenders have been fast to pass on the higher rate to borrowers since many of the loans are tied to an external benchmark, the transfer of the new rate to the liabilities has been delayed.