Savings rate hike on deposits flight: SBI

Country's largest lender State Bank of India (SBI) today said it will take a call on increasing interest rate on savings accounts if there is a flight of deposit to other banks.

"There had been accretion (to savings bank deposits)," SBI Chairman Pratip Chaudhuri said when asked whether the bank was planning to raise interest rate as was done by some private sector lenders.

"If we see there is flight or shift of deposits, then we will take a call," he said, explaining bank's stand on saving rate.

Last month the Reserve Bank deregulated interest rates on savings deposit accounts. Earlier, banks were mandated to give four per cent interest rates on such deposits, but with the freeing of rates, several private sector lenders, like Yes Bank and Kotak Mahindra Bank, have hiked rates to 6 per cent.

Even RBI Deputy Governor Subir Gokarn today said that the deregulation would increase competition amongst banks ks for retaining customers.

Speaking about extending banking facilities in villages with population of over 5,000 people by September 2012, Chaudhuri said "we have to open bank branches."

Besides, Finance Minister Pranab Mukherjee after his meeting with the bankers and SBI chief on financial inclusion here today said that the target of extending Rs 4.75 lakh crore short term crop loan for the current fiscal would be surpassed.

On covering 10,721 villages with banking service in West Bengal and eight north eastern states, Mukherjee said so far 4,969 villages had been covered and rest would be done within March 2012.

Source: Financial Express