Banks are unlikely to rush to launch copy-cat versions of State Bank of India's recently announced floating rate term deposit product.
The reason: while on the one hand, these deposits will pinch banks (cost of funds will increase) in a rising interest rate regime, and on the other, it could trigger customer grievances that they are being short-changed in a falling interest rate regime.
Caution is the watchword for banks when it comes to introducing floating rate liability products in a rising interest rate regime as retail customers parking money in fixed deposit are looking for steady, assured returns, say bankers.
MUTED RESPONSE
In the last decade or so, the fact that customer response to floating rate term deposits launched by a few banks, including SBI, Bank of India and IDBI Bank, has been muted response is not lost on bankers.
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