State Bank of India, the country's biggest lender, expects its average funding cost for savings bank accounts to rise 100-125 basis points, its chairman said on Friday.
"I think that's going to be inevitable. We are prepared for some pressure on the cost of saving bank funding," said SBI chairman Pratip Chaudhuri.
India's central bank on Tuesday deregulated the savings deposit rate, the last administered bank rate in India. Within hours, YES Bank , a new private bank, increased the rate it offers on such deposits by 200 basis points to 6 per cent from the earlier mandated 4 per cent.
The deregulation of the rate is expected to spark off competition among banks to garner low-cost deposits. New banks, like YES Bank and Kotak Mahindra Bankare expected to be more aggressive in mopping up such deposits.
Savings bank deposits comprise about 34 per cent of SBI's total deposit base, Chaudhuri said. Of the bank's total savings deposits, 30 per cent have a balance of more than Rs 100,000.
The central bank, while deregulating the rate on Tuesday, did not put a floor on the savings rate or restrict the number of times banks may change the rate. It does require that each bank offer a uniform interest rate on savings deposits up to Rs 100,000.
Chaudhuri, however, said SBI would not take the first call among the larger banks on raising the savings bank rate.
"We will have to see how other banks play it out and then we will take appropriate policy action," he said.
He said the increase in the savings bank rate would not be uniform--for higher value accounts it may be 100 basis points, but for lower value deposits it may be 50 basis points or less.
+1.jpg)
0 comments
Post a Comment