Time to revisit deposit rates

Time to revisit deposit rates: Interest rates on deposits should be market-based and linked to inflation; minimum balance should fetch FD rates...

"At the losing end
The SB deposit falls somewhere between the current account deposit and fixed deposit, and therefore such depositors should get an interest rate at least equivalent to average inflation rate, let alone positive real interest rate advocated for fixed deposits. In the case of PSBs, the SB interest rate at 4 per cent is below the average inflation rate.
In the case of both PSBs and PvSBs, depositors are denied the fixed deposit rate for their minimum balance, which anyway remains with banks on a continuous basis. In either case, depositors were at the receiving end and lost the market-determined interest rates.
RBI regulations permit withdrawal restrictions on savings bank accounts in order to distinguish between SB account and current account on which payment of interest is currently prohibited. This regulation has become redundant ever since the RBI permitted paying interest on SB deposits on the basis of daily balance."


Popular posts from this blog


The King of Ragas: Sankarabharanam