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  • 8/3/2019 Savings Rate

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  • 8/3/2019 Savings Rate

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    Rs.1 lac)

    Yes Bank 6.00% 6.00% 26/10/2011

    Kotak Mahindera Bank 5.50% 6.00% 01/11/2011

    IndusInd Bank 5.50% 6.00% 01/11/2011

    The Ratnakar Bank 5.50% 5.50% 01/11/2011

    Click Here for : Highest FD Rates of Banks in India

    What are the guidelines issued by RBI for banks at the time of de-regulation of Saving

    Fund Interests :

    On 25th October, 2011, RBI issued the following guidelines for the banks :

    All Scheduled Commercial Banks

    (Excluding RRBs)

    Dear Sir/Madam,

    Deregulation of Savings Bank Deposit Interest Rate - Guidelines

    1. Please refer to our Directive DBOD.Dir.BC.89/13.03.00/2010-11 dated May 3, 2011.

    2. As indicated in the Second Quarter Review of Monetary Policy announced on October 25, 2011, it has been

    decided to deregulate the savings bank deposit interest rate with immediate effect. Accordingly, the followingGuidelines will be effective from October 25, 2011:

    Banks are free to determine their savings bank deposit interest rate, subject to the following two conditions

    First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh,irrespective of the amount in the account within this limit.

    Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so

    chooses, subject to the condition that banks will not discriminate in the matter of interest paid on suchdeposits, between one deposit and another of similar amount, accepted on the same date, at any of itsoffices.

    3. The above revised Guidelines would be applicable to savings bank deposits of resident Indians only.

    4. Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings

    http://www.allbankingsolutions.com/DEPSUB1.htmhttp://www.allbankingsolutions.com/DEPSUB1.htmhttp://www.allbankingsolutions.com/DEPSUB1.htm
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    account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further

    review.

    5. An amending directive DBOD.Dir.BC.41/13.03.00/2011-12 dated October 25, 2011 is enclosed.

    Deregulation of Savings Bank Deposit Interest Rate

    In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and in partial

    modification of its directive DBOD.Dir.BC.No.89/13.03.00/2010-11 dated May 3, 2011, the Reserve Bank of Indibeing satisfied that it is necessary and expedient in the public interest so to do, hereby directs that banks are free to

    determine their savings bank deposit interest rate for resident Indians only with immediate effect subject to two

    conditions. First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh,

    irrespective of the amount in the account within this limit. Second, for savings bank deposits over Rs.1 lakh, a banmay provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate

    the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the

    same date, at any of its offices.

    Link for below:- http://www.allbankingsolutions.com/DEPSUB1.htm

    COMPARE FIXED DEPOSIT INTEREST RATES PAID BY BANKS IN

    INDIA

    COMPARISON OF FIXED DEPOSIT INTEREST RATES BY INDIAN BANKS - 2011

    (Check Highest Rate of Interest Paid by Banks in India / Maximum Rate of Interest Paid by Indian Banks. Best Fixed Deposit Rates by Banks)

    Which Banks Pay the Highest Rate of Interest on Fixed Deposits in 2011 ? Best Rate of Interest on Fixed

    Deposits in India in 2011 ? Comparative Bank Rates in India. Latest Deposit Rates of Banks in India 2011

    We give below the Highest Rate of Interest or the maximum rate of interest on Fixed

    Deposits in certain buckets offered by banks in India in 2011 (in the first week of

    November, 2011) :-

    Name of the BankPeriod of fixed Deposit

    Rate of

    Interest (%)

    Lakshmi Vilas Bank (LVB) 1 year to less than 2 years 10.50

    http://www.allbankingsolutions.com/Banking-Tutor/Highest-Interest-on-Saving-Fund-Accounts.shtml#Lhttp://www.lvbank.com/InterestChart.aspxhttp://www.lvbank.com/InterestChart.aspxhttp://www.lvbank.com/InterestChart.aspxhttp://www.allbankingsolutions.com/Banking-Tutor/Highest-Interest-on-Saving-Fund-Accounts.shtml#L
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    Name of the BankPeriod of fixed Deposit

    Rate of

    Interest (%)

    City Union Bank (CUB) 1 year to less than 2 years 10.25

    Tamilnad Mercantile Bank

    (TMB) 1 yr to 2 yrs 10.25

    Catholic Syrian Bank Above 15 months to less than

    27 months10.10

    South Indian Bank 300 days 10.00

    Dhanalakshmi Bank 300 days 10.00

    Tamilnad Mercantile Bank

    (TMB)5 years-10 years 10.00

    State Bank of Travancore 500 days 10.00

    City Union Bank (CUB) 2 years to less than 3 years 10.00

    Catholic Syrian Bank 375 days to less than 15

    months9.90

    PS ; In addition to above rate of interest, most of the banks offer upto 0.5% extra to senior

    citizens

    The above chart only gives a rough idea as to which banks are offering highest rate of

    interest in a particular bucket on a particular date. The above banks may not be offering

    the best rate of interest on fixed deposits in all other buckets / periods.

    CLICK HERE FOR FIXED DEPOSIT CALCULATOR

    Comparing rate of interests of banks in India for last few years indicate that they have been quite

    volatile. In 2010, the rate of interest started again going up as banks were short of funds. In the

    early 2011, these have further hardened. There has been very frequent changes by not only

    foreign banks but also by Public Sector Banks and it becomes extremely difficult to keepupdated data as most banks do not inform the media about the changes, and some even do

    not update their websites promptly. Moreover, now a days there are no standard bucketsacross all banks. Some banks are offering very high rate of interest for a particular segments

    based on some odd days (e.g. 333 days, 400 days; 555 days; 1111 days etc. etc.) It becomes all

    the more difficult to compare such rates in a single chart. Therefore, for the time being, we have

    withdrawn the comparative charts of fixed deposits across all maturities. After increase in reporates in last week of July, 2011, some banks have again increased rate of interest from 1st

    http://www.cityunionbank.com/english/deposit.aspxhttp://www.cityunionbank.com/english/deposit.aspxhttp://www.tmb.in/http://www.tmb.in/http://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.southindianbank.com/interestRate/interestRateList.aspxhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.statebankoftravancore.com/interests.htmhttp://www.cityunionbank.com/english/deposit.aspxhttp://www.cityunionbank.com/english/deposit.aspxhttp://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.allbankingsolutions.com/fdcal.htmhttp://www.allbankingsolutions.com/fdcal.htmhttp://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.cityunionbank.com/english/deposit.aspxhttp://www.statebankoftravancore.com/interests.htmhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.southindianbank.com/interestRate/interestRateList.aspxhttp://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.tmb.in/http://www.tmb.in/http://www.cityunionbank.com/english/deposit.aspx
  • 8/3/2019 Savings Rate

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    August, 2011 onwards. Therefore, it is advised to check up with the respective Bank before

    final decision is taken up for deposits. To make the life a bit easier for you, we give below thelinks for some major banks which will take you directly to the relevant page of interest rates of

    that bank.

    Click Here to know : Highest Rate of Interest on Saving Fund Accounts

    DIRECT LINKS FOR FIXED DEPOSIT RATES FOR MAJOR BANKS

    S.No. Name of the Bank

    1Allahabad Bank

    2Andhra Bank

    3Axis Bank

    4Bank of Baroda5Bank of India

    6Bank of Maharashtra

    7Canara Bank

    8Catholic Syrian Bank

    9Corporation Bank

    10Central Bank of India

    11City Union Bank

    12Dena Bank

    13Dhanalakshmi Bank

    14Federal Bank

    15HDFC Bank

    16ICICI Bank

    17IDBI Bank

    18Indian Bank

    19Indian Overseas Bank

    20Indus Ind Bank

    21Indian Bank

    22Indian Overseas Bank23ING Vysya Bank

    24J&K Bank

    25Karnataka Bank

    26Karur Vysya Bank

    27Kotak Bank

    http://www.allbankingsolutions.com/Banking-Tutor/Highest-Interest-on-Saving-Fund-Accounts.shtmlhttp://www.allbankingsolutions.com/Banking-Tutor/Highest-Interest-on-Saving-Fund-Accounts.shtmlhttp://www.allahabadbank.com/depositschemes.asphttp://www.allahabadbank.com/depositschemes.asphttp://andhrabank.in/english/InterestDeposits.aspxhttp://andhrabank.in/english/InterestDeposits.aspxhttp://www.axisbank.com/personal/interestrates/domesticdepositrates/Domestic-Deposit-Rates.asphttp://www.axisbank.com/personal/interestrates/domesticdepositrates/Domestic-Deposit-Rates.asphttp://www.bankofbaroda.com/interest.asphttp://www.bankofbaroda.com/interest.asphttp://www.bankofindia.com/rupeetermdeposit.aspxhttp://www.bankofindia.com/rupeetermdeposit.aspxhttp://www.bankofmaharashtra.in/int_chart.asphttp://www.bankofmaharashtra.in/int_chart.asphttp://www.canarabank.com/english/Scripts/DepositAccounts.aspxhttp://www.canarabank.com/english/Scripts/DepositAccounts.aspxhttp://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.corpbank.com/asp/0100text.asp?presentID=60http://www.corpbank.com/asp/0100text.asp?presentID=60https://www.centralbankofindia.co.in/site/Interest.aspxhttps://www.centralbankofindia.co.in/site/Interest.aspxhttps://www.centralbankofindia.co.in/site/Interest.aspxhttp://www.cityunionbank.com/english/deposit.aspxhttp://www.cityunionbank.com/english/deposit.aspxhttp://www.denabank.com/viewsection.jsp?id=0,3,21,125http://www.denabank.com/viewsection.jsp?id=0,3,21,125http://www.dhanbank.com/header/interest_rates.aspxhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.federal-bank.com/General_RatesandCharges_ServiceChargesandFees.aspx?type=hhttp://www.federal-bank.com/General_RatesandCharges_ServiceChargesandFees.aspx?type=hhttp://www.hdfcbank.com/personal/accounts/fixed_deposits/regular_fixed_deposit/regular_fd_interest.htmhttp://www.hdfcbank.com/personal/accounts/fixed_deposits/regular_fixed_deposit/regular_fd_interest.htmhttp://www.icicibank.com/pfsuser/interestrates/interestrates.htm#pleasehttp://www.icicibank.com/pfsuser/interestrates/interestrates.htm#pleasehttp://www.idbi.com/Interest_Rate.asphttp://www.idbi.com/Interest_Rate.asphttp://www.indianbank.in/rate_deposit.phphttp://www.indianbank.in/rate_deposit.phphttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.indusind.com/indusind/wcms/en/home/rates/term-deposit-rates/index.htmlhttp://www.indusind.com/indusind/wcms/en/home/rates/term-deposit-rates/index.htmlhttp://www.indian-bank.com/rate_deposit.phphttp://www.indian-bank.com/rate_deposit.phphttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.ingvysyabank.com/scripts/interest.aspxhttp://www.ingvysyabank.com/scripts/interest.aspxhttp://www.jkbank.net/intRates.phphttp://www.jkbank.net/intRates.phphttp://www.karnatakabank.com/ktk/InterestChartTD.jsphttp://www.karnatakabank.com/ktk/InterestChartTD.jsphttp://www.kvb.co.in/global/resident_domestic_deposits.htmlhttp://www.kvb.co.in/global/resident_domestic_deposits.htmlhttp://www.kotak.com/bank/personal-banking/deposits/term-deposits/interest-rates-for-term-deposits.htmlhttp://www.kotak.com/bank/personal-banking/deposits/term-deposits/interest-rates-for-term-deposits.htmlhttp://www.kotak.com/bank/personal-banking/deposits/term-deposits/interest-rates-for-term-deposits.htmlhttp://www.kvb.co.in/global/resident_domestic_deposits.htmlhttp://www.karnatakabank.com/ktk/InterestChartTD.jsphttp://www.jkbank.net/intRates.phphttp://www.ingvysyabank.com/scripts/interest.aspxhttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.indian-bank.com/rate_deposit.phphttp://www.indusind.com/indusind/wcms/en/home/rates/term-deposit-rates/index.htmlhttp://www.iob.in/Rates_at_a_glance.aspxhttp://www.indianbank.in/rate_deposit.phphttp://www.idbi.com/Interest_Rate.asphttp://www.icicibank.com/pfsuser/interestrates/interestrates.htm#pleasehttp://www.hdfcbank.com/personal/accounts/fixed_deposits/regular_fixed_deposit/regular_fd_interest.htmhttp://www.federal-bank.com/General_RatesandCharges_ServiceChargesandFees.aspx?type=hhttp://www.dhanbank.com/header/interest_rates.aspxhttp://www.denabank.com/viewsection.jsp?id=0,3,21,125http://www.cityunionbank.com/english/deposit.aspxhttps://www.centralbankofindia.co.in/site/Interest.aspxhttp://www.corpbank.com/asp/0100text.asp?presentID=60http://www.csb.co.in/asp/0100text.asp?pageId=43&headId=18http://www.canarabank.com/english/Scripts/DepositAccounts.aspxhttp://www.bankofmaharashtra.in/int_chart.asphttp://www.bankofindia.com/rupeetermdeposit.aspxhttp://www.bankofbaroda.com/interest.asphttp://www.axisbank.com/personal/interestrates/domesticdepositrates/Domestic-Deposit-Rates.asphttp://andhrabank.in/english/InterestDeposits.aspxhttp://www.allahabadbank.com/depositschemes.asphttp://www.allbankingsolutions.com/Banking-Tutor/Highest-Interest-on-Saving-Fund-Accounts.shtml
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    28Lakshmi Vilas Bank

    29Oriental Bank of Commerce

    30Punjab National Bank

    31Punjab and Sind Bank

    32South Indian Bank33State Bank of Bikaner and Jaipur

    34State Bank of Hyderabad

    35State Bank of India

    36State Bank of Patiala

    37State Bank of Travancore

    38Syndicate Bank

    39Tamilnad Mercantile Bank Ltd

    40The Ratnakar Bank

    41UCO Bank42Union Bank of India

    43Vijaya Bank

    Foreign Banks

    S No Name of the Bank

    1 Abu Dhabi Commercial Bank

    2 Bank of Ceylon

    3 Citi Bank

    4 China Trust Commercial Bank

    5 Deutsche Bank

    6 HSBC Bank

    7 Standard Chartered Bank

    8 Scotia Bank

    9 Royal Bank of Scotland

    http://www.moneycontrol.com/news/economy/savings-rate-freed-how-does-it-affect-

    youyour-bank_612005.html

    Investors followingYes Bank. Share this News with them.

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  • 8/3/2019 Savings Rate

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    1

    Saikat Das

    Moneycontrol.com

    Immediately after the Reserve Bank of India (RBI) de-regulated savings rate,

    private sector lenderYes Bankwas the first one to hike its savings deposit rateby 200 basis points to 6%.

    Peers Kotak Mahindra BankandIndusInd Bankjoined the bandwagon in the

    next two days.

    So, are you planning to shift your savings account?

    Consider this:

    No doubt de-regulation of savings rate will earn you some extra bucks on

    account of interest rates. However, you need to take care of some other factorsas well. Prior to the de-regulation, banks across the board, were offering uniform

    4% (p.a) rate of interest on savings deposits.

    A little higher rate of interest does not necessarily prompt a shift, said BrijeshDamodaran, founder of Zeus Wealthways, a financial advisory firm.

    Breaking a long standing relation with your existing bank is not easy. Over a

    period of time, you enjoy a lot of comfort level in dealing with your bank

    officials. You also get accustomed withbanks way of operations. Unless youhave huge balance, maybe over and

    above Rs 10 lakh, it does not make senseto shift your savings account to a new

    bank offering higher rate of interest.

    A greater savings account balance will

    fetch a depositor higher interest income.

    In personal finance parlance, savings

    account money is termed as idle money.

    Ideally, savers should keep money equalto their 3-6 months expenditure, in their

    savings accounts.

    Clients normally do not change their

    savings bank account only on higherrate. There are many other factors that

    help in customer retention. Those are

    1

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  • 8/3/2019 Savings Rate

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    loyalty, customer service and comfort level in dealing with the banks officials. We are not

    jumping into rate hikes like some of the banks have done, said Abraham Chacko, executivedirector,Federal Bank, a private sector lender.

    If a depositor is having multiple transaction links with his existing bank, a shift of savings bank

    account is not advisable. For example, if your demat account is liked to your savings and achange to a new bank will add to inconvenience. You may end up paying more transaction costs

    as well.

    What if, you are a new customer?

    There is no rationality for shifting your savings account on higher interest rate, said Sumeet

    Vaid, CEO and founder, Freedom Financial Planners.

    You have to see the convenience of banking in a particular bank. If a bank offers good service

    facilities, a new customer should go for it instead of looking at minimal rise in savings rate.There has to be a fine line between savings and investment. Do not expect good returns not from

    savings, but from your investment.

    Banks perspective

    Banks especially the smaller ones with lower share of current account and savings account (to

    total deposits) tend to plunge into rate hike war to grab market share. Yes Banks CASA ratiostood at just 11% with CASA base at Rs 4,839 crore out of total deposits of Rs 44,076 crore.

    Big banks may not hike rates soon as they have higher share of CASA, which will lead to

    increase in cost of borrowings.

    A 100 basis point rise in savings deposit rate would put a margin pressure of 22-25 basis points.

    If we go for a savings rate hike, we have to either bring down bulk deposit rates or hike lending

    rates to off-set the margin impact, M Narendra, CMD, India Overseas Bank toldMoneycontrol.com.

    Does de-regulation mean only upward revision of rates?

    Certainly not! Global experience shows, savings rates have actually come down after de-regulations. Here in India too, rates can come down.

    Banks Savings Rate (%)

    Yes Bank 6

    Kotak Mahindra Bank 6

    IndusInd Bank 5.5 - 6

    http://www.moneycontrol.com/india/stockpricequote/banks-private-sector/federal-bank/FBhttp://www.moneycontrol.com/india/stockpricequote/banks-private-sector/federal-bank/FBhttp://www.moneycontrol.com/india/stockpricequote/banks-private-sector/federal-bank/FBhttp://www.moneycontrol.com/india/stockpricequote/banks-private-sector/federal-bank/FB
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    There could be downward revision of savings rate as well.Accounts with less than Rs 1 lakh

    balance, are seen more of transaction accounts while accounts with more than Rs 1 lakh will be

    viewed as fixed deposits. In case of the former, rates may come down said Ananda Bhoumik,senior director, Fitch Ratings.

    http://www.hindustantimes.com/News-Feed/BusinessBankingInsurance/Savings-rate-deregulation-what-to-do/Article1-767875.aspx

    Savings rate deregulation: what to do

    Lisa Pallavi Barbora & Kayezad E Adajania, Hindustan Times

    November 11, 2011

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    First Published: 20:22 IST(11/11/2011)

    Last Updated: 22:46 IST(11/11/2011)

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    Your bank balance is about to get a boost. Effective 25 October, the Reserve Bank of India (RBI)

    deregulated the savings bank account interest rate. In simple words, every bank is free to fix the interest

    rate it wants to pay on savings account deposits, compared with the standard 4% that they

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    were mandated to pay till now.

    Soon after the deregulation announcement, three private banks raised savings account interestrate to 6% per annum for balances above R1 lakh and 5.5% for deposits less than Rs 1 lakh.

    The RBI has told banks to pay a uniform rate to all customers having savings account balance ofup to Rs 1 lakh. For balances above Rs 1 lakh, banks are free to choose interest rate bands.

    What this means for you

    Many financial experts believe that its unlikely that customers would switch banks anytimesoon, purely on account of higher interest rate. Moreover, if you have a salary account or your

    bank account gets debited every month towards your loan commitments or even for utility bills

    such as electricity or telephone bills, changing a bank account can get tedious. Also, the average

    Indian consumer has till now shown little interest in moving funds from one bank to another.

    This could be on account of long-standing relationships or simply the lack of any real need to doso. High networth individuals anyway move surpluses to liquid funds, said Pawan Joseph,vice-president, Motilal Oswal Wealth Management. In the case of retail customers who are not

    conscious about wealth management, a very small amount will shift. Moreover, the relationship

    with the bank and tied-in financial transactions are difficult to change.

    However, not everyone agrees. If other services are the same, customers will consider the

    benefit of higher savings rate, said KVS Manian, president-consumer banking, Kotak Mahindra

    Bank.

    Lets calculate how much a 150 basis points (one basis point is one-hundredth of a percentage

    point) hike in savings rate means for a Rs 50,000 balance. In a year it amounts to an additionalinterest of Rs 750, or Rs 63 more per month, before tax. If your bank hikes savings rate by 100

    bps compared with 200 bps by another bank, and you switch banks, then you stand to earn onlyR83 more every month for a bank balance of Rs 1 lakh. Not a large incentive to move your

    account, youd say.

    Do they match liquid MFs?

    Rising interest rates for the past two years have meant that your liquid funds returns have beenattractive. Between June 2011 and now, liquid and ultra short-term funds have offered about 7-

    7.5% return per annum. Further, dividends in liquid funds and ultra short-term funds are taxed at

    27% and 13.5% respectively, compared with 30.9% at which your savings bank account interestis taxed, assuming you are in the highest tax bracket. A back of the envelope calculation shows

    that investments in liquid and ultra short-term funds would outperform saving bank interest rate

    if you are in the highest tax bracket.

    Should you, then, continue with your systematic transfer plan (STP; putting a lump sum in liquid

    or ultra short-term fund and then switch systematically to an equity fund)? Its a smarter

    strategy to remain with a liquid fund and do STP in an equity fund, said Puneet Pal, senior vice-

  • 8/3/2019 Savings Rate

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    president and fund manager, debt, UTI Asset Management. Putting money in liquid funds give

    higher returns to investors compared with putting money in bank savings. Its easier also.

    Select banks join race

    Not all banks have raised rates. Banks that have raised rates such as Yes Bank, Kotak MahindraBank and IndusInd Bank, have relatively fewer savings accounts and hence, may be looking to

    attract customers who are getting lower interest rates. If and when other banks will follow is yetto be seen.

    This is a good reform, but it will take time to play out, said Pathik Gandotra, head, equities,

    IDFC Securities. Public sector banks are unlikely to raise rates as there is no reason or scope to

    do so.

    Large public banks have said that they arent in a hurry to raise rates. For State Bank of India,which has the largest deposit base, a 100 bps increase in savings rate can potentially increase

    their annual interest expense (for the rest of the fiscal) by 4-5% or Rs 1,400-1,500 crore.

    This can translate to a 15 bps or so reduction in net interest margin (NIM), if loan rates dont

    rise. For a bank, NIM is essentially the difference between the total interest earned and totalinterest paid as a percentage of total assets and it shows the average margin a bank makes by

    borrowing and lending funds.

    While this reduction may not be significant in itself, given the difficult economic environment, it

    will pinch the large banks. Even for private banks such as ICICI Bank Ltd and HDFC Bank with

    large deposit base, the effect on annual interest expense (for the rest of the fiscal) can potentiallybe between 3% to 5% increase.

    Passing cost to customers

    It's a given that banks that raise savings rate and incur additional costs are unlikely to absorb it

    and will pass it on to consumers. Banks paying higher rates will offer minimal benefits while lowsavings rate bank accounts might offer more benefits, experts said.

    What this means is that if you are getting 6% interest on your saving account, keep an eye out for

    the need to maintain a higher minimum balance, higher charges for cheque books, outstationcheque clearances, inter-bank transfers and so on. If banks are forced to raise rates there are

    going to be charges for everything, said Gandotra. Cost of service will go up as large banks

    will try to match each other. This hike (in savings rate) is not going to lower profit.

    What should you do?

    Dont be perturbed when you see your bank offering a 150-200 bps lower return on your savings

    account. If you have to open a new account then dont take only the savings account rate intoconsideration, but look at the services it offers and charges.

  • 8/3/2019 Savings Rate

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    Also, remember that a deregulated saving account rate means that if rates can be higher now they

    can potentially be lower in a different market environment. Just like fixed deposit rates move upand down depending on policy rate, the savings rate will also adjust.

    We suggest you stick to your liquid and ultra short-term funds to park your surplus cash. At the

    same time, a deregulated savings rate should spice up your savings bank account.

    more from this section

    Bad loans of Indian banks rise 33% in Q2 to over Rs 1 lakh cr

    Experts to prescribe financial products?

    Small saving schemes to earn you higher returns

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    15/19

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