INDECENT PROPOSITIONS: Business Line
http://m.thehindubusinessline. com/opinion/editorial/sbi- move-to-lower-the-interest- rates-on-savings/ article9804741.ece
Unkindest cut: Business Line editorial
Posted online comments
Unkindest cut: Business Line editorial
Posted online comments
M G Warrier
Indecent propositions*
This refers to your editorial “Unkindest cut” (Business Line, August 7). Public memory may be short. But savers who keep their savings in banks they trust cannot be expected to forget why they chose bank deposits as an instrument of savings, in the first place. State bank of India and major private sector banks have been challenging the commonsense of two categories of savers particularly, since the beginning of the current decade. The savers they have been taking for granted are, (a) elders who keep their ‘retirement corpus’ in bank deposits and (b) the High Net-worth salaried class who maintain huge balances in savings bank accounts.
In 2011, when after
long persuasion by depositors, RBI deregulated interest rates on Savings Bank
accounts, these banks made a mockery of the regulator’s guidance by either just
ignoring the RBI circular (banks like SBI) or making new stipulations and
fixing new thresholds for payment of interest on SB accounts (big private
sector banks), ensuring status quo in outgo on account of interest payments.
The message has been
loud and clear. Savers will remain at the mercy of banks. While media and
analysts dwell in detail on inflation, RBI’s base rates and inadequate
transmission of benefits of rate cuts, savers remain a neglected lot. To add
insult to injury, banks bargain for reduction of interest rates on savings
instruments with long term maturities outside the banking system as a
pre-condition for reduction in lending rates following reduction in bank rate.
GOI has been obliging.
This indecent challenge
from banks which have a monopoly over rural and semi-urban savings has
long-term implications. These include savings migrating to non-financial
sectors and the traditional moneylender resurfacing in new attire. Earlier the
regulator and GOI wake up, the better.
M
G Warrier, Mumbai
*A slightly edited version has been published in the Hindu Business Line, August 8, 2017.
*A slightly edited version has been published in the Hindu Business Line, August 8, 2017.
Comments