SBI announces higher fixed deposit interest rate for senior citizens
Falling interest rates also make a fixed deposit interest rate fall. With the COVID-19 pandemic has caused many to worry about their future. The GDP growth of the Indian economy is expected to hit a record low of 1 -2%. The monetary policy across the world is becoming as accommodative as possible. RBI has already announced Targeted Long term repo operation (TLTRO) to meet liquidity concerns. As a part of this on March 27, RBI slashed the repo rate by 75 basis points and thereby reducing it to 4.40%. It also reduced the reverse repo rate by 25 basis points to 3.75%. Going forward interest rates are expected to drop to further boost liquidity & credit in the market and thereby spur economic growth. Following such action leading public sector bank State Bank of India (SBI) also slashed its benchmark lending rate by 15 basis points, which brings its marginal cost of funds (MCLR) down to 7.25 from 7.40 percent.
SBI announced a premium interest rate for senior citizens
With lowered expectations on interest rates for borrowing the interest rate offered by banks for depositors is also expected to get lowered. This might not be happy for fixed deposit investors, especially retired people who do not wish to invest in risky assets and face capital erosion. They might also be dependent upon this income to meet their expenses.
SBI is also the largest aggregator of deposits than any other bank in India. To address the concern of senior citizen SBI has launched a new product called “SBI Wecare Deposit”. Under this product, the Bank offers an additional 30 basis point premium interest for senior citizens in the retail term loan segment. This is available for senior citizens who are willing to deposit for a tenor of 5 years and above. This scheme would be effective up to September 30.
It slashed the retail deposit interest rate by 20 basis points for deposits with tenor of up to 3 years. The bank in its statement said the action was in view of adequate liquidity in the system.
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