State Bank of India has reduced the interest rates for longer end domestic term deposits by 25 basis points with effect from January 13 following a fall in government bond yields and abundant liquidity in the system.

The revised interest rate for term deposits of maturities of one year to less than two years would be 5.75 per cent (6 per cent earlier), an SBI release said in Mumbai on Thursday.

In case of deposits of two years to less than three years and three years and above, the rate would be 6 per cent (6.25 per cent) and 6.25 per cent (6.50 per cent) respectively, it said.

On January 6, SBI chairman A K Purwar had said the bank was considering a reduction in deposit rates as government bond yields have fallen but fixed deposit rates have not, and SBI had to look at realigning them.

SBI said interest rates payable on deposits of maturities of one year and above to senior citizens would carry a differential rate of 50 basis points over and above the applicable term deposit rates.

The country's largest bank said rates payable on term deposits with maturities of 7-14 days, 15-45 days, 46-179 days and 180 days to less than one year would remain unchanged as also those on non-resident external deposits.

Some leading banks like Bank of Baroda, Union Bank of India and Punjab National Bank have already cut their deposit rates.