RBI panel to study freeing of savings bank rate

The Reserve Bank of India will soon set up a working group to look into the issue of deregulation of savings bank interest rate, said Ms Usha Thorat, Dy. Governor, RBI. Ms Thorat said ,'The deregulation of savings bank interest rate that is currently set at 3.50% by the RBI is an issue which is on our radar. A working group is being set up to debate the issues and draw conclusions." Totally freeing rates could lead to lowering rates in some areas while leading to increase in other areas. It would need to be ensured that there is no discrimination between different customers of the same bank, she said addressing the FICCI-IBI banking seminar in Mumbai on Wednesday. Another important consideration is whether deregulation of savings rate would draw more people into the fold of the formal banking system. The RBI has been taking measures to safeguard the interest of saving bank customers. From April 1, banks have been calculating the interest on balance in the savings bank account on a daily basis, against the earlier practice of calculating it on the minimum balance between the 10th and the last day of each month.(BL 09092010)