Bank savings rate raised after 8 yrs
MUMBAI: The money deposited to your savings bank account is all set to earn you a bit more after the central bank on Tuesday raised savings bank rates for the first time in eight years. This comes as good news for the common man who has been of late hit by rising loan rates and pinched hard by runaway inflation.
Among a series of adverse developments like higher interest rate and inflation that have been hitting and hurting the common man, there is some good news. The money deposited to your savings bank account is all set to earn you a bit more.
RBI governor D Subbarao has hiked the interest on savings rate to 4% per annum from 3.5% now. This means that for every Rs 1 lakh that is kept in the savings bank for a year, one would get Rs 500 more-that is Rs 4,000 compared to Rs 3,500 earlier.
What's even better for the common man is that the central bank, in its policy statement, said that it could do away with regulating savings bank interest rate and has floated a discussion paper. In case that happens, top bankers feel, some banks will hike interest rate in savings bank accounts even further to attract more low-cost deposits. However, fearing competition on this front, some large banks are opposing such a move by the RBI.
While the hike in interest rate is a welcome move for the those customers who keep a substantial part of their savings in savings account, banking analysts feel that this in turn could also prompt some banks to hike service charges, which would partially offset the higher outgo as interest costs in savings accounts.
While the hike in interest rate is a welcome move for the those customers who keep a substantial part of their savings in savings account, banking analysts feel that this in turn could also prompt some banks to hike service charges, which would partially offset the higher outgo as interest costs in savings accounts.
Source: The Times of India, May 4, 2011
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