New Delhi, October 3:State Bank of India on Tuesday reduced the interest rates on fixed deposits up to Rs 1 crore by 25 basis points to 6.5 percent. Country’s largest bank also reduced the interests for senior citizens. They will receive interests at the rate of 7.25 percent per annum. The changes will be effective from October 1. The bank had revised its rates in July this year too.

The action comes in the wake of the meeting of monetary policy committee on Wednesday. The bank has also reduced its base rate by 5 basis points. However, its lending rate continues to be at 8 percent on one-year tenure loans.

The Reserve Bank of India is expected keep instant rates stagnant at 6 percent. In its last policy review in August, the RBI reduced the repo rate by 0.25 percent to 6 percent, citing reduction in inflation risks. The rate cut was the first in 10 months and brought policy rates to a near 7-year low. However, retail inflation rose to a five-month high of 3.36 percent in August due to costlier vegetables and fruits.

Assocham, in its plea to the Monetary Policy Committee, requested to cut the interest rates at least by 25 basis points, given the challenges being faced by the economy which needs immediate measures for revival of growth.