7.25% interest on savings accounts! New banks turning dreams into reality
Indian banking industry doesn’t usually favour individuals when borrowing isn’t cheap and savings rates trail headline inflation. However, with increasing competition, new banks have started to take notice of what customers want, and accordingly offer generous interest rates.
However, one can’t be sure about the permanence of these offerings.
To serve the customers, new payment banks (PBs) and small-finance banks (SFBs) are offering interest rates as high as 7.25% on savings accounts, which is more than 300 basis points higher than the 4% offered by universal banks.
However, industry analysts and experts say these initial offers are like appetizers, adding that once the market evolves, rates will comed down.
“Savings accounts are meant for transactions, and our belief is that people are not rate sensitive regarding such accounts: Attractive offers can give a temporary bump, but will not be economically viable for the entity in the long run,” Samit Ghosh, CEO Ujjivan Small Finance Bank, told ET.
The Reserve Bank of India (RBI), country’s central bank, might not even interfere with these interest rates on offer. Experts believe that until and unless there is some stress on their capital position or some consumer grievances are reported, they can make strategies and decide their rates accordingly.