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Kolkata-based United Bank of India and Allahabad Bank are not in favour of deregulation of savings bank interest rates. Both feel that deregulation of interest rates will not work out as expected for the country and might lead to a possibility of having different rates in different markets where the smaller depositor loses out to the larger ones.
Mr M.R. Nayek, Executive Director, Allahabad Bank, said: “ Hiking the interest rate by one percentage point will be more effective than deregulation. It is still not the right time to deregulate the savings bank deposit interest rates.” He further added the portfolio of the current savings accountholders and their contributions to the total deposit portfolio in the bank need to be considered before deregulation of interest rates take place.
Mr S.L. Bansal, Executive Director, United Bank of India, too maintained that there should be no deregulation of savings account interest rates. “Such deregulation may not work well for financial inclusion. Some banks might offer higher interest rates to depositors who keep more money in their savings accounts. Thus, a smaller depositor, particularly if he is from the rural area, will always lose out to one from the urban areas,” he said.
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