State Bank of India cuts medium term deposit rates by 0.25% citing slow credit growth, raises short term rates

Country's largest lender State Bank of India today cut its interest rate offering for medium-term deposits by 0.25% to 8.75%, citing slower-than -expected pick up in advances.
However, it increased rates for shorter tenor deposits of 180-210 days by 0.25% to 7.25% per annum.
"In view of abundant liquidity coupled with slower-than- anticipated credit pick up, State Bank of India (SBI) has decided to cut the deposit rates by 0.25% to 8.75%," the bank said in a statement.
The downward revision of rates is for deposits between one and three years and is applicable from September 18, it said.
The bank added that with the inflation trending down -- consumer price inflation for August eased to 7.80% -- the rate adjustment will continue to ensure that the depositors are compensated "adequately with a positive real rate on their deposits."
It can be noted that banks have been complaining about issues in credit offtake, even as the sentiment has improved following the formation of a stable government at the Centre.
The system's year-on-year increase in credit stood at 10.94% for the fortnight ended August 22, which is almost at par with the 10.61% observed in 2009 in the aftermath of the financial crisis.