The mid-size private sector lender IndusInd Bank on Monday became the third bank to increase the pricing on savings account deposits by up to 200 basis points.
“The savings accounts balance up to Rs. 1 lakh will get 5.5 per cent per annum, while those above Rs. 1 lakh will attract 6 per cent. The new rates will be effective tomorrow,” the city-based bank said in a statement here this afternoon.
The Hinduja Group-promoted bank has also revised its base rate and BPLR upwards by 25 basis points to 10.75 per cent and 20.75 per cent respectively effective today in line with the increase in repo rates by the Reserve Bank.
While ‘Yes Bank’ was the first to hike pricing on savings deposits uniformly by 200 basis points irrespective of the size of the balance, on the very same day, when the Reserve Bank freed it, Kotak Mahindra Bank followed suit yesterday with a dual pricing in the similar manner as IndusInd has effected from today.
Began in 1994, IndusInd Bank has 350 branches and 666 ATMs spread across 247 locations, besides one representative office in London and Dubai.
Savings bank rate was the last of the regulated rates in the domestic banking industry. It was raised by 50 bps in May to four per cent after being unchanged for 8 long years.
Against this, term deposit rates are as high as 8-10 per cent.
While the RBI, for long, has been keen on freeing it, the industry body IBA was opposing it saying any such move would push up the costs of banking services like ATMs charges, money transfers and cheque books to protect margins.
The second largest private lender HDFC Bank head Aditya Puri was categorical in stating that “whether banks increased the SB rates or not, the cost of banking services would definitely go up following the RBI move“.
The RBI move is not good news for larger banks with high savings account balances like SBI, HDFC Bank, ICICI Bank, PNB and Axis Bank or any other state-run banks, Deutsch Bank said in a note.
