Banks won’t deregulate savings acct rate

Based on the suggestions received from 24 banks,the consolidated feedback of the banking industry has been sent to the RBI for consideration.

“It is not the appropriate time to go for deregulation of savings bank account. Particularly,at a time when the interest rates are going up and inflation is having an upward bias,’’ KR Kamath,CMD,Punjab National Bank,said.

However,banks have said that in case the RBI preferred to decontrol the rate on savings,they should be allowed to charge adequately for the services that they are providing without cost.

The banks have argued that since the rate has now been revised upward to 4 per cent,the depositors are getting compensated.

“Also the rate is being calculated on a daily basis. Till the time there is some stability on inflation and other key rates,savings rate should not be deregulated in the interest of the industry,” bankers pointed out.

The RBI had said that it has to examine whether the deregulation can help bring more people into the formal banking system. Interest rate on savings bank deposits has remained unchanged at 3.5 per cent (raised to 4 per cent on May 3) since March 1,2003. Keeping in view progressive deregulation of interest rates,RBI had prepared a discussion paper to delineate the pros and cons of deregulating the savings bank deposits interest rate. FE