SBI hikes fixed deposit interest rates by up to 0.50%

The revised rates entail 50 basis points (bps) rise for deposits maturing in seven days to forty-five days, now fetching 3.50% interest rate. Similarly, for 46 days to 179 days, the bank has raised rates by 25 bps to 4.75% interest.

Fixed deposits ranging from 180 days to 210 days will yield increased interest rate of 5.75% after a 50 bps hike. Meanwhile, the 211 days to less than 1 year tenors will now provide a 6% interest rate following a 25 bps increase.

For longer-fixed deposits, SBI's adjustments have boosted rates by 25 bps, reflecting an interest rate of 6.75% for FDs maturing in 3 years to less than 5 years.

With this, SBI joins the list of banks that have raised their interest rates on fixed deposits this December, including Bank of India, Federal Bank, Kotak Mahindra Bank and DCB Bank.

The development comes after RBI Governor Shaktikanta Das-led monetary policy committee (MPC) on December 8, 2023, kept the repo rate unchanged for the fifth time at 6.5%.

However, the central bank earlier implemented six consecutive rate hikes, totalling 250 basis points, until the pause in April.

Das, in October policy, emphasised that while the repo rates have been raised by 250 basis points, this increase has not been fully transmitted to bank deposit rates.

During the period when the RBI increased the repo rate, banks gradually followed suit by raising their FD interest rates, although there was some delay in transmission. Banks that initially delayed raising their FD rates have since been increasing them to catch up with the RBI's policy actions.

For perspective, when the repo rate increases, FD interest rates follow suit, and when the repo rate decreases, FD interest rates decline as well.