SB account rate deregulation to push up banks' interest cost: Vijaya Bank CMD

Bangalore, Oct 25: Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank, told that the rate hike today was on expected lines, which the market has already factored in.

"It is too premature to say that whether we will transmit to customers and if at all, when as the RBI has asked banks to come out new product schemes on the savings bank front. Savings deregulation will result in some increase in interest cost to banks. So it is a different situation from the last RBI rate hike, and in my opinion, transmission might be required not unless interest cost on savings bank is compensated by pricing of transactions in the savings bank services like remittances etc."

Credit growth is already slowing down in the banking industry, and new sanctions also have substantially declined, he said. "However, many banks have announced festival offers which will ensure that the interest rate is low over the next two-three months. Because of festival rates, no slowdown is expected in the immediate future."