SBI Slashes Interest Rates on 'Har Ghar Lakhpati' Scheme: Higher EMIs Now Required

In a move that could impact millions of small savers, the State Bank of India (SBI) has announced a reduction in interest rates on its highly popular ‘Har Ghar Lakhpati’ savings scheme. The revised rates mean that customers aiming to become a ‘lakhpati’—a person with ₹1 lakh in savings—will now need to contribute higher monthly installments than before.

The scheme, widely favored by middle- and lower-income households, has been a go-to option for individuals looking to build a substantial corpus through systematic small savings. However, with the latest cut in interest rates, the path to achieving that ₹1 lakh goal has become slightly steeper.

Why the Interest Rate Cut Matters

SBI’s ‘Har Ghar Lakhpati’ scheme was launched to encourage disciplined saving habits among ordinary citizens. With attractive interest rates and a clear goal of accumulating ₹1 lakh over time, the scheme gained widespread traction.

But the recent interest rate reduction has come as part of a broader trend across the banking sector. From home loans to savings accounts, financial institutions are trimming rates in response to changes in the Reserve Bank of India’s (RBI) repo rate policies.

This shift is designed to balance liquidity and profitability, helping banks maintain a healthy financial position amid evolving economic conditions. However, the ripple effect of such changes tends to hit the middle class and economically weaker sections the hardest—precisely the groups that rely most on schemes like ‘Har Ghar Lakhpati’.

What This Means for Investors

With the revised interest structure, existing and new investors in the scheme will now be required to increase their monthly contributions in order to reach the same ₹1 lakh target within the original maturity period.

For example, if earlier an investor needed to deposit ₹1,200 per month to reach the ₹1 lakh mark in five years, they may now need to deposit around ₹1,350 or more—depending on the new interest rate—just to keep pace.

This not only alters financial planning for families, but also forces savers to rethink their monthly budgets, especially those already navigating tight household finances.

A Broader Economic Context

This move by SBI is not isolated. It comes at a time when many banks are revisiting their interest rate offerings amid global economic shifts and domestic monetary policy adjustments.

Lower interest rates often indicate an effort by the central bank and financial institutions to stimulate borrowing and spending. But for savers, especially those investing in long-term fixed-income instruments, it translates into lower returns.

Moreover, with inflation affecting daily expenses, the need to earn more from investments becomes even more critical for the average household. This makes the reduction in interest rates particularly burdensome.

Time for a Financial Reassessment

With this change in place, financial experts are advising individuals—especially middle-income and lower-income families—to reassess their investment strategies. Here are a few key recommendations:

• Recalculate your monthly savings goals to align with the new interest structure.

• Consider diversified investment options such as recurring deposits, SIPs, or public provident fund (PPF) schemes.

• Track SBI’s official updates regularly to stay informed about changes in interest rates or scheme terms.

Conclusion

SBI’s decision to cut interest rates on the ‘Har Ghar Lakhpati’ scheme may seem like a small tweak on paper, but its real-world impact could be substantial for those depending on this route to financial security. With higher EMIs now necessary to reach the same savings milestone, the move underscores the importance of adaptive financial planning in a changing economic environment.

As India’s largest public sector bank, SBI’s decisions often set the tone for the broader financial sector. Savers, therefore, would do well to stay informed and proactively manage their investment strategies to ensure their long-term financial goals remain achievable—even in the face of changing interest rates.