SBI against savings rate deregulation

Country's largest commercial bank State Bank of India (SBI) has said it was against deregulation of savings bank interest rates.

"We are not in favour of savings interest rate deregulation," SBI Chairman Pratip Chaudhuri said.

He said there was an impression that the banks were sitting on a huge pool of savings deposits.

It is to be noted that RBI in its draft discussion paper floated in April favoured deregulation of the interest rate on savings banks accounts.

Chaudhuri said the margins on interest rates were required to finance delinquencies and deregulation would create an upward pressure on the savings rates.

This, he said, would lead to higher cost of credit which would be detrimental to industry.

Contrary to SBI's views, many private bankers like YES Bank were in favour of savings rates deregulation.

To this, Chaudhuri said that unlike nationalised banks, the private banks' presence in the rural areas were almost negligent.

"They are not opening no-frills accounts unlike us and offering other benefits for which the bank has to take a substantial financial drag," he said.