Big banks wedge move to free savings rates

At a time when interest rates are rising, some of the largest banks are trying to block the move to deregulation of the savings bank rate, fearing the cost would rise beyond 4% in the diet free market.

While the Indian Banks’ Association “(IBA) had earlier opposed the motion, the issue was raised again for discussion at the meeting of the Reserve Bank of India monetary policy in the post with the bank chiefs on Tuesday. The bankers, who are divided between the players, young and old have addressed the question of the evening at the meeting of the management committee of IBA.

While banks are willing to lend funds from the RBI night by 8%, which threaten to increase royalties from basic banking services, such as the use of checks and ATMs, if the savings rate are liberalized, which is considered as an admission that they are using cash balances savings grant funds.

In addition, they appeal to the interests of small investors will continue to be in a regulated system. For example, the banker said that the free market system, said with RS 1 lakh or more in his savings bank account should be 6%, with an unlimited number of such controls gifts. But with another person of Rs 1 lakh 50 000 RS to earn 5%, and a limited number of free checks. The other extreme would be someone who is in his 10 000 Savings RS and earns 4%, and receives only 10 free checks will be a year.

Executives with some of the smaller and new banks, which have lower current account-savings bank account (CASA) balances, said that if the rate of savings was released, they immediately raise rates. While admitting that the banks are paying more in the months of close things down as the difference between the rates of time deposits and savings rates of the banks of the contract. “It’s the overall experience. Therefore, fixed deposit interest rates would be unstable in the short term and in any case, it would be beneficial to depositors,” said a bank manager.

Currently, the SBI will pay 7% of term deposits with maturities of up to 90 days, representing a difference of three percentage points in interest rate savings. When it comes to one-year deposit rate fixed, the difference is 375 basis points, as the largest bank in the country, offers 7.75% on such deposits. The story is similar for all banks.

Bankers said the biggest players are concerned that new banks are expected in the picture, the battle for the balances of savings will only intensify. “RBI must index the inflation rate, which can assist filers earning more on their savings fund,” says one banker.

Source: [TOI]

Processing your request, Please wait....