CCI probing state-run banks' savings account interest rate

The competition watchdog is looking at the 4% interest PSBs offered on savings accounts

The Competition Commission of India (CCI) is probing public sector banks (PSBs) for possible cartelisation in terms of the interest offered on savings accounts.

In an interactive session with businessmen at the PHD Chamber of Commerce and Industry, CCI Chairman Ashok Chawla said the competition watchdog was looking at the four per cent interest PSBs offered on savings accounts.

"Some banks are giving six per cent, but all PSBs, which account for about 70 per cent of the banking sector, are still holding on to four per cent. So, we will look at that," he said.

"This was earlier fixed by RBI (Reserve Bank of India). The CCI gave some advisory about two years ago, and they (RBI) freed it theoretically."

He said the Competition Commission of India had received some complaints on this issue.

"What we will see is whether by virtue of combining together or by forming a cartel, all of them (banks) are paying the same amount of interest. How is that (situation) arising? We will look at that and if it needs further investigation, we will do that," he told Business Standard.

To a query on the actual recoveries by the CCI, he said these were very low.

"The penalties might be Rs 11,000-12,000 crore and we have recovered only about Rs 1,000 crore. The rest has been stayed by superior courts; that is where the matter stands."

On the predatory pricing seen in the e-commerce segment, he said while such pricing was an offence under the competition law, "one has to determine whether that entity, either in the retail sector as a whole or in the e-retail segment, is dominant".

Indirectly referring to Flipkart's Big Billion Day sale, he said predatory pricing had to be over a period.

"I mean, it cannot be a day or two days; it doesn't make it predatory. But if it is on a sustained basis, it is an offence," he said.