Apropos the edit “Saved by RBI” (October 31), savings rate deregulation could be a mini-bonanza for small depositors and should be welcomed. Within hours of the Reserve Bank of India’s announcement, banks increased interest rates on savings accounts. Banks that do not have a strong “low-cost” deposit base, now, have the opportunity to attract savings deposits by offering higher interest rates. This will set the stage for tougher competition among bankers and, thus, wooing customers will become a top priority for all banks. However, it is noteworthy that the deregulation will have an impact on the profitability of banks that implement the increase. Therefore, one fears that by offering higher rates, banks may increase some hidden costs.
Prem K Menon, Mumbai (BS)
