Recently, some major banks revised their interest rates on bank fixed deposits (FDs). State Bank of India, the country’s largest lender, on 29 April, cut interest rates on FDs by 25-50 basis points (bps) in select maturity baskets. For instance, interest rates on 2 years to less than 3 years has now been reduced from 6.75% to 6.25%, while interest rate on 3 years to 10 years basket has come down to 6.25% from 6.50%. One basis point is one-hundredth of a percentage point.
On 23 April, Bank of Baroda, the third largest public sector bank in terms of assets, had also reduced its interest rates in the smaller tenure FDs while increasing interest rates for the longer duration deposits. For instance, it reduced the interest rate from 7.00% to 6.90% for 1-year tenure. However, in the 3-year to less than 5-year tenure, it has increased the FD rates from 6.50% to 6.75%.
