The nation's largest bank SBI today dismissed allegations of cartelisation by big banks in keeping savings deposit rate unchanged despite RBI deregulating this over a year ago.
Disputing the charges, SBI MD and CFO Diwakar Gupta said the bank's decision not to raise interest rates on savings deposits is a purely commercial one and does not amount to cartelisation. "I said it is not cartelisation," Gupta told reporters on the sidelines of a conference organised by consulting and accounting major PwC here.
SBI and its five subsidiaries, which nearly control 25 per cent of the banking system, have not increased their savings account deposit rates. They offer 4 per cent. Gupta said he has been reading reports over the past few days about a possible action by the competition watchdog on banks for allegedly acting as a cartel by not increasing the rate on saving deposits, which was deregulated by the Reserve Bank in the October 2011 credit policy.
The interest rate on savings accounts was the only regulated product in banking till the RBI deregulated it. Following this, only two commercial banks - Kotak Mahindra and Yes Bank - raised the deposit rates to 6 and 7 per cent respectively. These banks, which were facing problems in raising the low-cost CASA (Current Account, Savings Account) deposits in the past, claim the move has been immensely beneficial.
From the cooperatives space, city-based Saraswat Bank had also increased the rate to 7 per cent. Other banks currently offer just 4 per cent on an annualised basis to savings bank account holders, which was even lower at 3.5 per cent till April 2011.