Apropos the news report “Big boys waiting for cue from SBI” (November 1), the euphoria over savings rate war will soon vanish once the dust settles.
There are several issues that have to be considered before taking advantage of this development. First, customers have to comply with know your customer (KYC) norms before they open new accounts. Although the process appears simple, only a few customers may take such initiatives after weighing cost-benefit issues. Second, savings accounts are not that profitable considering that banks are offering attractive rates on fixed deposits with shorter maturities (read 15 days to 90 days).
Third, banks would experience asset-liability mismatches if they become aggressive about mopping up savings deposits. Although asset-liability management is merely a concept for several banks, any high variation in maturing liability would throw up liquidity issues requiring the attention of the top management.
And finally, all business accounts are held in the form of current accounts and hence are not affected by the deregulation.
K V Rao, Bangalore
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