State Bank of India on Tuesday slashed the interest rate on short-term fixed deposits up to 179 days by 0.5 per cent, a move expected to be followed by other lenders.
Interest rate on fixed deposits between 7-179 days has been reduced to 7 per cent from 7.5 per cent, SBI said in a statement.
The new rate would be effective from July 18, it said.
In case of bulk deposits above Rs. 1 crore, the downward revision has been effected in two maturity buckets.
The interest rate on term deposits between 7-60 days has been reduced by 0.25 per cent to 6.25 per cent while for 61 days to less than one year, it has been reduced to 6.75 per cent from the existing 7 per cent.
Last month, the central bank had left key policy rate unchanged in its bid to rein in inflation.
The repo rate, at which the Reserve Bank of India lends to banks was retained at 8 per cent. The cash reserve ratio for banks was kept unchanged at 4 per cent.
SBI last reduced its fixed deposit rates in February by up to 0.5 per cent on select maturities.
While deposit rates for maturities of three to five years was lowered by 0.25 per cent, those for five years and above were cut by 0.50 per cent.