Despite falling interest rates, Kotak Mahindra Bank has decided to retain its deposit rate of six per cent on savings accounts (with deposits over ₹1 lakh) for at least one year, according to Uday Kotak, Executive Vice-Chairman and Managing Director.
“We would like to hold on to six per cent as long as we can,” Kotak said in a press meet in Mumbai on Thursday.
The bank is targeting a CASA ratio in excess of 40 per cent in the next 12-18 months, he added. CASA ratio is the ratio of current account and savings accounts deposits to total deposits expressed as a percentage.
Kotak said the higher interest rate on savings accounts had helped the bank grow its savings account deposits at over 35 per cent. Of this, the erstwhile ING Vysya Bank grew its deposit base at about 30 per cent against nine per cent prior to merger and the old Kotak Bank grew its deposits at 40 per cent.
Kotak said the decision to keep deposit rates at six per cent was taken in anticipation of a higher level of competition as there is likely to be a change in the structure of the banking industry with the entry of payments banks and small finance bank, besides rewarding savings bank depositors.
Kotak added that the bank’s dependence on wholesale deposits and term deposits also came down as these savings accounts were sticky for all practical purposes.