Prior to cutting its Benchmark Prime Lending Rate (BPLR) on Wednesday by half a percentage point, SBI had cut its BPLR in January by 75 basis points. Since then, the bank has cut its deposits rates six times, adding up to almost 2 percentage points. SBI’s CFO S Ranjan said that as the bank is still paying high interest rates on most of its fixed deposits, which were taken till last year, the overall cost of funds has not declined substantially. He said that the present cut in the BPLR by 50 basis points will reduce its net interest margin by around 6 basis points from 2.91% at the end of the last fiscal.

The present round of rate cuts by SBI is the result of the request made by FM Pranab Mukherjee with heads of government-owned banks to cut lending rates to provide impetus to the economic growth.

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