State Bank of India has cut its fixed deposit rates for the second time in a fortnight, after pressure from the government and the RBI to align lending rates to external benchmark like the repo rate.
The country’s largest lender on Monday also reduced its marginal cost of lending rate (MCLR) by 10 basis points across tenors. Its oneyear MCLR now stands at 8.15%. This is SBI’s fifth consecutive cut in MCLR this fiscal.SBI cut its term deposit rates by 20-25 basis points and bulk TD rates by 10-20 bps across tenors. Now, these FDs will fetch you an interest rate of 5.80%.State-run banks are under pressure from the government to cut rates to help prop up the economy, which has slowed to a six-year low. Banks have resisted multiple diktats by the Reserve Bank of India and the government as their deposits tend to reprice at a slower pace, which affects their ability to transmit. This is evident from the fact that despite 110 bps cut to the repo rate in 2019, banks have been able to cut MCLR and term deposit rates by just 20-25 bps.