SBI won't raise FD interest rates anytime soon: Here's why
State Bank of India (SBI) chairperson Dinesh Khara has revealed that the bank is unlikely to raise fixed deposit (FD) interest rates in near future. In an interview with CNBC-TV18, Khara stated, "We are comfortably placed on deposits, growing better than last quarter. Don't think we would have to increase deposit rates." This comes as leading lenders such as HDFC Bank, ICICI Bank, Axis Bank, and Canara Bank, are looking to attract more deposits even at higher costs.
SBI's current and savings account ratio back to pre-pandemic levels
SBI's low-cost deposits, as shown by the CASA (current and savings account) ratio, have returned to a level seen before the COVID-19 pandemic. The CASA ratio measures the proportion of current and savings deposits to total deposits. Among the top five banks, SBI has the second highest CASA ratio of 40%. Axis Bank (42%) leads the tally. ICICI Bank is at third spot with 39.4% while HDFC Bank (37.7%) and Canara Bank (31.65%) take the fourth and fifth spots, respectively.
SBI's liquidity coverage ratio is comforting: Khara
Khara is comfortable with SBI's 130% liquidity coverage ratio, which indicates the amount a bank should have in cash and other liquid assets to meet short-term payments within the next 30 days. SBI's credit-deposit (CD) ratio is 66%, one of the lowest in the industry. The SBI chariman explained that for every Rs. 3 raised in deposits, SBI lends slightly less than Rs. 2 to borrowers, signifying ample cash reserves.
Current fixed deposit rates and RBI's upcoming decision
SBI last increased interest rates on certain fixed deposits on December 27, 2023, targeting deposits below Rs. 2 crore across various tenures. The Reserve Bank of India (RBI) is widely expected to maintain interest rates in the upcoming Monetary Policy Committee (MPC) meeting that concludes on February 8. The benchmark repo rate, which is the interest rate at which the central bank lends short-term funds to commercial banks, has remained unchanged at 6.5% for 10 months.
