The Hindu Business Line : Savings bank rates left unchanged

Chennai April 24 There wasn't anything to cheer for over 300 million savings bank account holders in the credit policy. They will have to be content with the 3.5 per cent interest rate they get on those balances for some more time. Apparently all bankers don't agree that they should get more.

When asked by Business Line at the conference as to why the RBI had not done anything on the SB deposit rate despite high inflation, Dr Reddy said, "It is an extremely complex subject. We have reviewed it repeatedly with bankers. Some bankers feel we should deregulate completely. Some bankers feel that we should increase the interest rate a bit. Some bankers feel that savings bank accounts are like current accounts. So we should not give any interest at all."

Dr Reddy added, "It has not been possible for us to get a reasonable consensus on what should be done. In the absence of consensus, we have decided internally that status quo may continue unless there are demonstrable advantages for a change of a reasonably permanent nature."

He said that because millions of people are involved, any change should come after considerable thought.

Dr Rakesh Mohan, Deputy Governor, added that savers had the option of keeping a part of their money as fixed deposits in banks that earn them higher interest; whereas savings accounts are basically transaction accounts.

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