State Bank of India is going to slash interest rates on NEFT, RTGS

State Bank of India
Written by Vinduja

State Bank of India cut interest rate on the savings account

State Bank of India ( SBI ), the all- Indian bank is going to introduce 2 tier interest rate savings bank with effect from 31st July 2017. The balance above Rs 1 crore will continue to earn interest at 4 per cent per annum whereas the interest at 3.5 per cent rate will be earned on the balance Rs 1 crore & below.

The decline in inflation rate & high rates of real interest is one of the main considerations for allowing revision of the rate of interest on savings bank deposits.

State Bank of India

State Bank of India

Why this move?

The bank is cutting the Marginal Cost of Funds based Lending Rate ( MCLR ) by ninety ( 90 ) basis points which were effective from 1st January 1, 2017, on the power of large inflows in the savings & the current accounts during the period of demonetization in 2016 months of November & December. There has been some important outflow of Current and Savings Account ( CASA ) deposits. The revision in the savings bank rate would help & enable banks to maintain the Marginal Cost of Funds based Lending Rate( MCLR )at the existing rates, benefitting a huge segment of retail borrowers in affordable housing segments, SME & agriculture.

It may be summoned that State Bank of India (SBI) had lately reduced the charges for National Electronic Funds Transfer (NEFT ) & Real-time gross settlement  (RTGS) transactions by up to 75 per cent which is effective from July 15th, 2017. The charges reduced were applicable on the transactions are done through the mobile banking (MB ) &  internet banking (INB ) services offered by the bank.

State Bank of India ( SBI ) has 3.27 crore customers of internet banking & 2 crore customers of Mobile Banking as on 31st March 2017.

Our take:

Reducing the NEFT transactions rate will help state bank of India (SBI) in promoting net banking services. Also, it will help banks in regulating its operation more efficiently. Let’s stay tuned to find out what their next policy is going to be!

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