The State Bank of India (SBI) has requested the Reserve Bank of India (RBI) to reduce the minimum tenure for fixed deposits to three days from seven days. However, it is unlikely the banking regulator will grant the wish of the country’s largest bank.
The unfixed deposit scheme of SBI, launched earlier in the year, became a huge success. The bank allows depositors to withdraw their funds after seven days, as the minimum period for fixed deposits.
Initially, SBI was paying 8.5 per cent interest for the scheme, now brought down to 6.5 per cent.
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Speaking on the issue of interest rates on savings bank deposits, SBI Chairman Pratip Chaudhuri said he had requested the regulator to reduce the tenure of minimum deposit from seven days to three days.
“We think a savings bank is not about rate of interests alone. It is about the facilities, the experience and so on. In fact, I am requesting RBI, time and again, that the tenure of minimum deposit be reduced from seven days to three days,” he said.
While most banks are facing difficulties in mobilising resources, reflected from the fact that deposit growth has been sluggish for two years, SBI’s deposit mobilisation remained robust. Chaudhuri said the bank had excess liquidity of Rs 55,000 crore to Rs 60,000 crore.
The central bank has remained non-committal on SBI’s request, bankers said. “If the tenure of a minimum fixed deposit is brought down to three days, then it is as good as a current account, which does not offer any interest. RBI has reservations on the request,” said a banker.
Bankers said in a recent interaction with RBI officials, SBI had also requested the central bank to allow banks to offer interest rate to current account holders. Present regulations prohibit this.
