Banks body rejects plan to free SB interest rate
Oct 4: A bankers organisation on Monday said that the Reserve Bank’s proposal to deregulate interest rate on savings bank accounts, if implemented, will adversely impact the “stability” of the sector.
“If the deregulation comes, there can be a flight of deposits which will hurt banks’ stability,” Indian Banks Association’s chief executive officer, Mr K. Ramakrishnan, said.
“Bankers (have) told the RBI that this is a current and savings account-driven industry and such a move can affect banks (adversely),” he added. Mr Ramakrishnan said that all banks were opposed to the move and “felt strongly” about its impact on their stability.
RBI had invited chiefs of top banks for the customary pre-policy meeting before the second quarterly review of its monetary policy scheduled for November 2, during which bankers expressed their opinion.
Among the bankers who attended the meeting at Mint Street were SBI CMD, Mr O.P. Bhatt, ICICI CEO and MD, Ms Chanda Kochhar, Standard Chartered’s India head, Mr Neeraj Swaroop and HDFC Bank MD, Mr Aditya Puri.
Last month, RBI deputy governor, Mr Usha Thorat, had said that the deregulation of interest rate on savings accounts is on the central bank’s radar and a working group will soon be set up to examine possibilities of the same.
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