The momentum in inflows into savings bank deposits has sustained for the second quarter running for banks that raised interest rates. The inlows into smaller banks have spiked after the Reserve Bank of India deregulated the savings bank rate in October 2011. The savings bank deposit inflows for YES Bank, Kotak Mahindra Bank and IndusInd Bank together grew by 27 per cent in the three-month period ended March 2012.

The move by the RBI to deregulate rates prompted these banks (including Karnataka Bank, which is yet to declare results) with a small share of savings bank accounts to offer 5-7 per cent compared to the prevailing 4 per cent.

The savings bank deposits of the three banks grew by 60 cent during the six months ended March 2012. What is noteworthy is that this was a period of high term deposit rates too, and yet these banks managed higher inflows into savings bank accounts.

YES Bank saw its savings deposits treble in the six-month period to more than Rs 2,500 crore, and got the most inflows in absolute terms among the three banks. Incidentally, YES Bank offers the best savings bank rate and has aggressively expanded its branch network over the last one year.

However, the jump in savings bank deposits is on a small base and these as a proportion of total deposits continue to be low.

For YES Bank, savings bank deposits accounted for 5.1 per cent of its overall deposits as of March 2012, up from 1.9 per cent in September 2011.

For Kotak Mahindra Bank and IndusInd Bank the proportion of savings bank deposits is 13 per cent and 11 per cent, respectively, as of March 2012.

While these three banks together have around Rs 12,200 crore in their savings bank accounts, PNB and ICICI Bank have Rs 1.05-lakh crore and Rs 76,046-crore respectively.

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