SBI hikes deposits rates by 25-50 bps

State Bank of India (SBI) today raised interest rates on deposits by 25-50 basis points across various maturities with effect from tomorrow to match the rates offered by competing banks.

The country's largest commercial bank hiked deposit rates by 50 basis points on deposits of one year to less than three years to 6.75 per cent and 3 years to less than five years to 7.00 per cent.

For the seven to 14-day deposits too, it has raised interest rate by 50 basis points to 3.50 per cent. One basis point is one hundredth of one per cent.

"We have raised deposit rates to align with market trends. The hike is higher for medium term deposits as bulk of our deposits are in these maturity buckets," Deputy Managing Director and Chief Financial Officer M M Lateef said.

SBI has hiked rates by 25 basis points on deposits of 14-45 days to 4.75 per cent, 46-179 days to 5.25 per cent, 180 days to less than one year to 6.25 per cent and five years and above to 7.25 per cent.

The super saver term deposit scheme (six to 10 years) will carry a new rate of 7.75 per cent against the old rate of 7.50 per cent.

About the impact of interest rate hike on cost of funds and net interest margin, Lateef said the extent of increase in cost of deposits owing to the increase in deposit rates would be minimal and the bank did not expect much pressure on its NIM.

SBI's cost of deposits declined from 4.82 per cent in June 2005 to 4.47 per cent in June 2006. Its NIM was down to 3.37 per cent from 3.77 per cent a year earlier. The NIM in June 2005 adjusted for one-time interest income was 3.14 per cent.