Repo-link Effect: SBI Savings A/c Holders With Balance Above ₹1 Lakh To Get Lower Interest

Savings bank account holders in SBI having more than ₹1 lakh balance will earn a quarter percentage point less interest from Wednesday, with the country’s largest lender linking interest rate to the RBI’s repo or short-term lending rate.

However, SBI savings bank account holders with less than ₹1 lakh balance will continue to get 3.5 per cent interest on deposits.

According to the information provided on the website of State Bank of India (SBI), the interest rate on savings bank accounts with balances above ₹1 lakh will be 2.75 per cent below the RBI’s repo rate, which currently stands at 6 per cent.

Hence, SBI will give 3.25 per cent interest on savings bank deposits with balance exceeding ₹1 lakh. At present, the interest rate is 3.5 per cent and the interest is paid quarterly. The interest rate on such balances will go up in case the RBI hikes the repo rate, and may fall further if the repo rate continues its downward journey.

SBI, which controls nearly a quarter of the banking system, was giving interest at a rate of 3.5 per cent for savings bank deposits up to ₹1 crore and 4 per cent for deposits above ₹1 crore till Tuesday.

Earlier, in March, SBI had announced that it would be linking its savings deposits rates and short-term loans to the RBI’s repo rate from May 1 with the aim to ensure faster monetary transmission.