NEWS & ADVICE : FIXED DEPOSITS
SBI not in favor of deregulating savings bank rates
By Neelima Shankar
Mar 17, 2011
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The largest lender of the country, State Bank of India has expressed its discontent on the issue of deregulation of savings account rates saying that it would not be beneficial to the banking industry.

According to chairman of SBI, Mr O P Bhatt, "Deregulation of savings account interest rate will not be good for the domestic banking system. It may at best help a few banks and not definitely the system."

He added that the savings account system is unique to the Indian banking industry and that Indian banks would face trouble in long term lending without this remaining in play.

Banking regulator, Reserve Bank of India had talked about bringing out a discussion paper in this regard. "There is a view that we should deregulate the interest rate on savings bank accounts too. We are examining the pros and cons of doing that and will shortly put out a discussion paper for eliciting feedback," RBI governor Subbarao had said.

"Regulation has both costs and benefits. Excessive or inappropriate regulation increases intermediation cost, impedes efficiency and stifles innovation...," Subbarao had said.


 


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