SBI removes minimum balance requirement; cuts interest rate on savings accounts to 3%

India's largest public-sector lender State Bank of India (SBI), on Wednesday, cut interest on savings bank accounts to 3% and balanced the move by waiving minimum balance requirement, which could give the lender a number of new customers.

But it also reduced the interest rates on fixed deposits, leaving less money in the hands of pensioners, who invest in this financial instrument.

Fixed deposits (FDs) maturing between 7 days to 45 days will now fetch an interest rate of 4% as against 4.50% earlier.

Interest rates on FDs maturing in one-year and above have been reduced by 10 basis points. One-year to less than two-year tenor FD will earn an interest rate of 5.90% against 6% earlier. FD for similar tenor will fetch an interest rate of 6.40% instead of 6.50% for senior citizens.

Keeping in mind the 'Customers First' approach, the bank said it has also waived SMS charges, which will bring significant relief to all the customers.

"Bank has also rationalised interest rate on SB Account to a flat 3 % p.a. for all buckets," it said in a statement.

Currently, the interest rate on SB accounts is 3.25% for deposits up to Rs 1 lakh in saving accounts, and 3% for deposits above Rs 1 lakh.

"The charges on maintaining AMB are now waived off on all 44.51 crore SBI savings bank accounts," it said.