SBI new interest rate rules on savings account and short term loans from May 1

State Bank of India (SBI) set a new interest rate rules on large savings account deposits and short-term loans. SBI had announced this new rules in March and it will effective from today (May 1).

According to this new rules, SBI will link its interest rate on savings account with balance above Rs 1 lakh and short-term loans like overdraft and cash credit facility to Reserve Bank of India's (RBI) repo rate.

If the RBI changes its Repo rate then the interest rates on large SBI savings account deposits and interest rate on some short-term loans will automatically change.

This will help in better transmission of RBI's policy rates into the banking system.

SBI said in a statement, "For balances upto Rs 1 lakh, it will offer an interest rate of 3.50 percent per annum, while deposits over Rs 1 lakh will receive interest rate at 3.25 percent only".

"All cash credit accounts and overdrafts with limits above Rs 1 lakh will also be linked to the benchmark policy rate with additional of 2.25 percent", the bank further said.