ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Deregulation of the Savings Bank Deposit Rate

Deregulation of the interest rate on savings bank deposits will allow more room for non-price competition for improving the quality and diversification of customer service rather than result in a rate war. Given the nature of savings bank deposits vis-à-vis other deposits, some further regulatory guidelines would be required to complete the rationalisation of these accounts. It is the category of current account deposits in the current plus savings bank deposits segment that essentially determines the differences in the cost of funds between banks.

An attempt is made in this note to analyse certain related issues concerning the pattern of ownership of savings bank deposits (SBDs) and facilities associated with these deposits. It is proposed that given the nature of SBDs vis--vis other forms of deposit, some further regulatory guidelines

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