SBI fixed deposit rates hiked by 5 bps to 25 bps, seniors benefit more; but there's a catch

In a major good news for depositors, the largest lender in India, the State Bank of India (SBI), on Wednesday increased rates of fixed deposits below Rs 1 crore with effect from May 28, 2018. The hike was in the range of 5 basis points and 25 basis points. however there is a catch, not all the tenures have seen a rise in their interest rates, only a few have. This means if you plan to earn higher term deposit rates, you might want to look at the tenure and then decide what to do with your investment. A term deposit means a cash investment by a customer at banks and other financial institutions. This is usually invested at an agreed rate of interest rate over a fixed tenure. 

Here’s what you need to know before making an investment at SBI based on these rates. 

Public term deposits

At SBI, investment made for lower tenures like 7 days - 45 days, 46 days - 179 days and  180 days - 210 days will have same interest rates of 5.75%, 6.25% and 6.35% respectively. 

There was no change in interest rate of tenures like 211 days - less than 1 year, 3 years - less than 5 years and 5 years - up to 10 years. These tenure continue to provide interest of 6.40%, 6.70% and 6.75% respectively. 

Only two tenures saw hike in their rates. Deposits made for 1 year to less than 2 years will give you interest rate of 6.65% which was higher by 25 basis points from previous 6.40%. Also, deposits made for 2 years to less than 3 years will give interest rate of 6.65% up by 5 basis points from previous 6.60%. 

Senior Citizen 

Between 5 basis points to 25 basis point hike was also made in term deposits for senior citizens. However, the hike was made in only two tenures just like public ones. 

Deposits made for 1 years - less than 2 years will give interest rate of 7.15% up by 25 bps from previous 6.90%. Also tenure of 2 years - less than 3 years will give 7.15% rate which above 5 bps from previous 7.10%. 

Whereas, tenures like 7 days - 45 days, 46 days - 179 days, 180 days - 210 days, 3 years - less than 5 years and 5 years - up to 10 years interest rates were unchanged at 6.25%, 6.75%, 6.85%, 7.20% and 7.25%.

Some interesting facts!

Interest rate payable to SBI Staff and SBI pensioners will be 1% above the applicable rate.

Rate applicable to all Senior Citizens and SBI Pensioners of age 60 years and above will be 0.50% above the rate payable for all tenors to resident Indian senior citizens i.e. SBI resident Indian Senior Citizen Pensioners will get both the benefits of Staff (1%) and resident Indian Senior Citizens (0.50%).

Further, the proposed rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits.

Interest rates on “SBI Tax Savings Scheme 2006(SBITSS)” Retail Deposits and NRO deposits shall be aligned as per the proposed rates for domestic retail term deposits. 

However, NRO deposits of Staff are not eligible for additional 1% interest otherwise applicable to staff domestic retail deposits, these rates of interest shall also be made applicable to domestic term deposits from Cooperative Banks.