Savings bank deposit rates are most likely to be deregulated. Currently they are the only rates which are still under RBI regulation.
Dr K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, said on Thursday, "we are in favour of deregulating all interest rates, including savings bank. The direction is very clear. But, the decision will be taken after having adequate debate on the issue."
Interest rates in India are highly deregulated. The only ones still regulated are savings deposit accounts, non-resident Indian (NRI) deposits, and export credit.
Chakrabarty however said that he does not expect interest raes on savings deposits to move in a wide range after deregulation. Currently banks provide 3.5% interest on savings accounts.
"This is a highly competitive market. Prices do not vary much. But what will be the rate, what customers will get, will depend on market conditions," he said.
Bankers favor deregualtion saying that it would aid in efficient asset liability management by banks. They also say that competitive pricing would benefit the customers of such accounts.
Interest on savings account is now calculated on daily basis from 1st April 2010.