Mumbai, Sept. 8: There is some good news for savings bank depositors as the RBI is seriously considering deregulation of interest rates on savings deposits. A working group is being set up by the RBI to consider and come to some conclusion on the deregulation of interest rates on savings bank deposits.
Deregulation of savings bank interest rates is an issue that is “very much on our radar” said Ms Usha Thorat, deputy governor of the RBI. She said given the level of interest rates on bank deposits, common persons are lured by higher interest provided by alternate channels especially in the informal markets. “The deregulation of savings bank interest that is currently set at 3.5 per cent is an issue which is on our radar.” She said a working group would debate the issues and draw conclusions.
Observing that the low cost savings accounts provide banks with low cost funds on a long term which facilitate ALM and help lower lending rates. However the costs not currently recovered in handling such accounts have to be considered as well she said. Ms Thorat was delivering the keynote address on the second day of the 3-day banking conference organised jointly by Ficci and IBA.
She said that if rates are totally freed in situations where there is virtual monopoly of banking, it could lead to lowering of rates in some areas while leading to increase in other areas. “It would need to be ensured that there is no discrimination between different customers of the same bank.