Some banks may reduce rates for bulk deposits

Some banks may reduce rates for bulk depositsSome banks in the country have indicated that they might reduce rates for bulk deposits if they raise interest rates on savings account following RBI's deregulation of interest rates.

Indian banks are racing to increase savings account interest rates in order to attract more customers. However, state-run banks appear more cautious in increasing their rates and are waiting for the Reserve Bank of India's final guidelines on savings rate deregulation to finalize their new rates and features for savings accounts.

M Narendra, chairman and managing director of Indian Overseas Bank said that the bank is looking at various aspects to make savings accounts more broad based to benefit both the bank and the customers.

"Though the RBI had said the deregulation of savings account was with immediate effect, we are waiting for a final word from the regulator as we will be keen to unveil innovative deposit products along with the new rates for savings accounts," said Narendra.

Meanwhile, The State Bank of India chairman, Pratip Chaudhuri has said that it is unlikely that the bank will increase its savings bank account rate saying that the SBI believes that the people will continue to trust services provided by the bank. Diwakar Gupta, Managing Director & chief financial officer, SBI also said that clearly that the SBI will not be the first state-run bank to increase interest rates.