Any hike in the interest rates on savings bank deposits of above Rs 1 lakh by public sector banks is almost ruled out for now.
“There has been no impact of the hike in interest rate by a few players following deregulation. We have, in fact, added significant portfolio under SB accounts recently,” Mr M Bhagavantha Rao, Managing Director, State Bank of Hyderabad, told Business Line .
The strong branch network of public sector banks in non-urban areas is also working in their favour.
No migration
“We have not seen any migration from our savings bank account. We have seen 16 per cent growth in the nine months till December 2011,” said Mr T.M. Bhasin, Chairman and Managing Director, Indian Bank.
“I don't think the hike in savings bank rate will be done any time soon,” Mr Bhasin added.
According to Ms Archana Bhargav, Executive Director, Canara Bank, and Ms Shubhalakshmi Panse, Executive Director, Vijaya Bank, high term deposit rates being offered by public sector banks have also to be factored.
“We, however, have seen some migration, with about 5-7 per cent impact on our SB portfolio. There has also been a shift to term deposits,” Mr Shubhalakshmi Panse said.
Bank of Baroda too has no plans to hike SB rates due to migration of SB deposits to term deposits, Mr N. S. Srinath, Executive Director, Bank of Baroda, said.
On the rationale behind non-increase of SB rates, Mr K. R. Kamath, Chairman and Managing Director, Punjab National Bank, said the SB rate is an anchor rate for deciding the entire interest rate structure in the country and is the basis for offering many other services at nominal charges.
“If one gives a higher interest rate, then the entire structure may come under pressure. Or we may have to start charging for every service.”
(With inputs from N. S. Vageesh.)