In a bid to stave off competition from the likes of Kotak Mahindra Bank, IndusInd Bank and YES Bank, ICICI Bank has unveiled a rewards programme for customers transacting through savings bank (SB) account.
The rewards programme comes at a time when the abovementioned banks are paying higher interest rates, ranging from 5.5-6 per cent on SB balance up to Rs 1 lakh and 6-7 per cent on balance over Rs 1 lakh.
All public sector banks and majority of the private sector banks, including ICICI Bank, HDFC Bank, and Axis Bank, have left their SB interest rate unchanged at 4 per cent. This is despite the Reserve Bank of India deregulating the SB interest rate last year.
Industry experts say India’s largest private sector bank, besides responding to the challenge posed by smaller rivals on the SB deposits mobilisation front, is possibly targeting multiple objectives through the rewards programme, called ‘MySavings Rewards’.
The bank may be seeking to get existing retail depositors to maintain higher balances, attract new ones, migrate transactions to alternate channels — Internet and mobile, give a thrust to e-commerce, and cross-sell loans to retail depositors.
Retail customers of ICICI Bank will get reward points for various transactions including activating Internet banking, shopping online/ paying utility bills with Internet banking, and auto-debit from savings account towards equated monthly installments for home/ auto/ personal loan/ recurring deposit.
Further, customers will get points for activating mobile banking, shopping though mobile, consolidating family banking accounts, and activating demat account.
For example, a customer will get 100 points when he logs in to ICICI Bank’s Internet banking for the first time. The bank is offering one point for every Rs 100 spent online and 10 points every time a registered biller is paid using Internet banking.
Monthly Average Balance
Rolled out from September 1, ICICI Bank’s SB customers, maintaining monthly average balance of Rs 15,000 or more, will automatically earn reward points. This will be reflected in their SB statements from October onwards. These points can also be clubbed with points earned on credit card transactions.
The points can be redeemed by a customer by logging in to his internet banking account and clicking on the ‘redeem’ option. The customer can redeem his points from a wide range of lifestyle products to household items to travel to auto accessories.
Competition for SB deposits
The competition to mobilise low-cost SB deposits seems to have prompted ICICI Bank to throw down the gauntlet to its smaller rivals. It has extended the strategy used to market credit cards to SB accounts.
After Kotak Mahindra Bank increased the interest rate on SB deposits by 50 per cent last year, it clocked a robust year-on-year (y-o-y) growth of 67.5 per cent in these deposits from Rs 3,307 crore (June-end 2011) to Rs 5,540 crore (June-end 2012.
On a larger base, ICICI Bank’s SB deposits grew at a slower clip — 16.1 per cent y-o-y growth — from Rs 66,858 crore (June-end 2011) to Rs 77,923 crore (June-end 2012).