Fifty per cent of bank deposits are made up of fixed deposits in urban and metropolitan centres. The figure for March 2010 was Rs 23 lakh crore out of a total of Rs 46 lakh crore.
Another 12 per cent dwell in high-balance current accounts, on which no interest is paid. As a consequence, non-price competition for these resources is often fierce.
As for savings accounts, though they make up one-fourth of all deposits, balances in rural and semi-urban centres are generally small. This is true even if one ignores non-performing ‘one-rupee' deposits which come on the books merely to meet targets for ‘financial inclusion'.
Urban/metro savings accounts, however, are another story. Balances are larger, on average; and widely dispersed around the mean.
Post-deregulation, biggies such as SBI, HDFC Bank and ICICI Bank will try to stay put; as long as they can.
But, while they ponder which way to jump, the competition will make full use of the freedom to offer differential rates of interest on savings accounts with balances in excess of Rs 1 lakh (for balances up to one lakh, banks have to pay the same rate to everyone, whether the balance is high or low).
This proviso goes a long way towards enhancing the ability of banks to choose whether and how much to hike the rates for customers who have large savings balances; and other financial needs as well.
No one really knows how many savings accounts fall into the fully liberalised category.
But if one conservatively assumes that the top ten per cent account for 20 per cent of urban/metro savings deposits that can yield a tidy Rs 1.5 lakh crore. Definitely worth fighting for.
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