The interest earned on savings bank deposit is likely to be credited in the account every month as compared to the present practice of quarterly basis. The Reserve Bank of India (RBI) is likely to ask the banks to increase the frequency of interest payment on savings account deposits.
According to bankers, the regulator feels that the banks are now having robust technology platform which will enable to increase the frequency for crediting the interest.
Bankers said they have the required technology to perform this function.
Following the deregulation of interest rates on savings bank deposits in October 2011, banks are now free to decide the interest rate on savings bank. In April 2010, RBI had also mandated banks to calculate interest rate on a daily basis on savings bank deposits.
Banks have been asked to credit Interest on savings bank accounts on regular basis irrespective of the account is operative or not.
Some bankers expect RBI may announce the increase of frequency in crediting savings bank deposit interest as soon as on the third quarter policy review day, 29 January.
On the policy stance front, RBI is expected to cut interest rate for the first time in nine months, by at least 25 bps, bankers said. In April, the central bank had reduced the policy rate or the repo rate by 50 bps – after a gap of three years, but maintained status quo in the following five policy meets as inflation stayed above it comfort zone of 4.5-5%.
Though headline inflation December grew at its lowest pace in three years, which fell to 7.18% from 7.24% of the previous month, but growing concerns of growth may prompt the central bank to cut rates for stimulating demand, analysts said.
According to analysts, RBI will also draw comfort from the government’s recent initiatives to address the twin deficits. Apart from reforms like allowing foreign direct investment in multi brand retail and aviation, the government also increased import duty on gold by 50% to 6%, in order to address high current account deficit.
