New Delhi:  Country's largest lender State Bank of India (SBI) on Monday slashed interest rates on fixed deposits by up to 1 per cent across various maturities, a move that may prompt other lenders to follow the suit.

The bank, however, has ruled out cut in benchmark lending rate saying the bank is offering one of the lowest rates in the industry. The base rate or minimum lending rate of SBI stands at 10 per cent. Base rate is the benchmark rate below which a bank cannot lend.

As regards deposit rates, SBI in a statement said, "The bank has decided to revise its retail term deposit rates across various tenors with reduction ranging from 0.25 per cent to 1 per cent."

The bank, however, has raised interest rate on 180 days fixed deposits scheme from existing 7 per cent from to 7.25 per cent. The new rates would be effective from April 24, it said.

Giving details SBI Chief General Manager (financial control) Sunil Pant said the bank has reduced interest rates on fixed deposits with maturity between 7-179 days by 0.75 per cent to 7.25 per cent.

For term deposits with maturity between 181 days to less than 1 year, the new interest rate will be 0.5 per cent lower than the existing 8 per cent, he said. At the same time, fixed deposits between 1-3 years maturity will earn 0.5 per cent lower return at 9 per cent from existing 9.5 per cent, he said.

Following the RBI's decision to cut key interest rate by 0.5 per cent to 8 per cent in its annual credit policy last week, several banks including ICICI Bank, IDBI Bank and Punjab National Bank reduced both lending and deposit rates.

"Repo rate cut has a signal impact. In terms of cost, it is not as significant as compared to CRR," SBI Chairman Pratip Chaudhuri told a television channel.

"Our base rate is already one of the lowest in the industry. We are at 10 per cent and 10.75 per cent is where others are coming from. So, even if they will drop the base rates to 10.5 per cent, we are still a good 50 basis points lower than that," he said. Although, SBI has not cut base rate, it has reduced interest rate on car loan.

Now for every Rs 1 lakh, a customer has to pay Rs 1,725 EMI against Rs 1,765 per month earlier. SBI claimed this as the lowest EMI. With the reduction, a borrower would end up saving Rs 480 per year on every one lakh.

The interest rate on car loan has been reduced from 11.25 per cent to about 11 per cent. The bank had last revised its fixed deposit rates in March this year.

Meanwhile, other banks including Allahabad Bank, Kotak Mahindra Bank reduced base rate by 0.25 per cent. The bank has decided to revise downward its base rate and Benchmark Prime Lending Rate (BPLR) by 0.25 per cent with effect from May 1, Allahabad Bank said in a statement.

Accordingly, the base rate and BPLR of the Kolkata-based lender will be 10.50 per cent and 14.75 per cent respectively. Kotak Mahindra Bank also trimmed its base rate by 0.25 per cent from 10 per cent to 9.75 per cent from April 26.

All categories of loans (other than the exceptions permitted by RBI) will henceforth be priced with reference to the revised base rate, Kotak Mahindra Bank said. Private sector Lakshmi Vilas Bank reduced its fixed deposit rates on select maturities by 0.25 per cent from April 20.

(Agencies)