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At a time when many public sector banks are struggling to attract low-cost deposits — despite having large branch presence — their private sector counterparts saw a healthy growth, on the back of branch expansion and product innovation. Private-sector lenders attributed customer satisfaction as one of the reasons for the growth in current account and savings account deposits (Casa), known as low-cost deposits.
ICICI Bank, the country’s largest private-sector lender, has managed to grow Casa at 16.2 per cent in the last financial year. Similarly, HDFC Bank’s savings growth also picked up steam and grew 17 per cent in the fourth quarter of FY14 compared to 7.4 per cent in the previous quarter. Current account deposits, too, expanded 26 per cent in the fourth quarter over the previous quarter.
“The bank continued to see a healthy momentum addition of Rs 13,482 crore to its savings account deposits and Rs 6,319 crore to its current account deposits, reflecting a year-on-year growth of 16.2 per cent in overall Casa deposits as of March 31, 2014. We're quite happy we could improve the Casa average basis from 38 per cent to 39 per cent. The focus would be to continue that approach and stabilise that number between the 38 per cent and 40 per cent level even as we grow the total balance sheet,” said N S Kannan, executive director of ICICI Bank, in an analyst conference call after the fourth quarter results.
Federal Bank, which has maintained the savings rate at 4 per cent, has grown its Casa by 33.82 per cent as of end-March, compared to 33.47 per cent in December, 2013.
Shyam Srinivasan, chief executive and managing director of Federal Bank, explains that high interest rate on savings account in itself is not a big crowd puller. “One or two per cent high rate on savings account does not make much of a difference. This is because people typically don’t keep too much money in their savings account and as a result the difference is negligible.”
He added that instead of rates, consumers give more preference to factors such as convenience and services.
Sumant Kathpalia, head (consumer banking) at IndusInd Bank, also believes that innovative products with differentiated focus has allowed the banks to improve its savings account share. “For mid-sized banks like us, it is very important to ensure that you offer something to your consumer that no one else is offering and that is the way you can gain market share.”
He added that the bank believes in rolling out a unique product or service, every six months, that no one else has in the market.
Apart from providing better services, banks have also been wooing consumers with better offers on debit cards and net banking spends. Bankers agree that in order to get the youth to notice them in a competitive market like this, they need to dole out more offers on savings bank account-related services like debit card, net banking, etc. Lenders agree this is being used as a differentiator in a competitive market.
Moreover, banks have also been focusing on the digital medium to target the youth consumers. ICICI Bank and Kotak Mahindra Bank have also allowed consumers to open bank accounts or transact via using their social media accounts in order to tap the new-age consumers.
Rana Kapoor, managing director and CEO of Yes Bank, believes that apart from offering quality service, exercises that help the bank connect with youth such as sport or social media have also been effective tools in connecting with new consumers. The lender, which offers seven per cent interest for savings bank deposits of Rs 1 lakh and above and six per cent for less than Rs 1 lakh, recorded a 28.8 per cent growth in savings account in FY14.
So far as current account is concerned, banks are working on improving the relationship with the corporate clients to grow the volumes.
