Deregulation of the savings bank interest rate has led to a sharp spike in the savings bank deposits of Kotak Mahindra Bank in Tamil Nadu.
The bank, which has 19 branches in the state, will open three more branches over the next six months.
In a press release issued here, the bank said that after the RBI deregulated the savings bank rates, it has begun offering two sets of SB interest rates — 6 per cent for balance above Rs 1 lakh and 5.5 per cent up to Rs 1 lakh balance maintained in the SB account.
The bank said the high interest rates offered by it on SB deposits clicked with the customers since it matched the post-tax yield of term deposits of “short to medium tenure’’. That the interest earned in the savings bank account up to Rs 10,000 per year was tax free also weighed in with the customers.
Kotak Mahindra Bank said that after the new liberalised interest regime for SB deposits was announced by the RBI in October last year, it has witnessed a surge in SB deposits in Tamil Nadu. The SB deposit amount has grown by 45 per cent from Rs 181 crore to more than Rs 263 crore.
(The bank had, at the all India level, seen a huge spurt of 68 per cent in the savings bank deposits over a one-year period ending June 30, 2012 — from Rs 3,307 crore as on June 30, 2011 to Rs 5,540 crore as on June 30, this year. But this period also includes about four months before the RBI came out with its announcement on SB rates).
The bank is aiming at increasing its branch network, including its customer base, by 15 per cent annually over the next few years in Tamil Nadu. The bank’s Tamil Nadu branches have a cumulative deposit of around Rs 1100 crore, of which Coimbatore, where it has two branches, accounts for about Rs 150 crore.