SBI shares up 5% as it cuts interest rate on savings account deposits

New Delhi: Shares of State Bank of India went up by nearly 5 percent on Monday after it slashed interest on savings account deposits by 50 basis points to 3.5 percent on balance of up to Rs 1 crore. The SBI stock rallied 4.71 percent to Rs 313.30 on BSE. On NSE, it gained 4.74 percent to Rs 313.30. [caption id=“attachment_3877091” align=“alignleft” width=“380”]  Reuters[/caption] However, the bank will continue to offer 4 percent interest on savings account balance of Rs 1 crore and above. “The bank is introducing two-tier saving bank interest rate with effect from 31 July. While balance above Rs 1 crore will continue to earn interest at 4 percent per annum, interest at 3.5 percent will be offered on balance of Rs 1 crore and below,” SBI said in a regulatory filing. It further said: “The decline in rate of inflation and high real interest rates are primary considerations warranting a revision in rates of interest on savings bank deposits.” “The rate cut by SBI on savings bank account is a strategic move by the bank aimed at increasing profits. This is purely a commercial move which will boost profitability and ratios for the bank,” said Jimeet Modi, CEO, SAMCO Securities. Buying was also seen in other bank stocks, with Bank of Baroda trading 3.25 percent higher, ICICI Bank up 2.60 percent and PNB (1.92 percent). The BSE bank index was trading 1.37 percent higher at 28,405.09 during the late afternoon trade.