Savings Account Rates to Stay at 4 Percent, Says HDFC Bank
"The deregulation of the savings account has not had a substantial impact on our growth," Puri told shareholders at the AGM over the weekend here.
"The savings account is a transaction account and there is a cost attached to it. So, four percent rate is fair and that's why you see most of the larger banks have not changed it," he said.
Puri further said only a couple of banks have increased their pricing because they were not getting traction on the savings deposits front.
Following RBI's move last October to lift the interest rate cap of 4 percent on savings account, a few lenders like YES Bank, Kotak Mahindra Bank and Saraswat Bank increased their offerings up to seven percent, giving rise to expectations that there will be a flight of deposits to these lenders.
However, bigger banks, including State Bank of India, ICICI Bank and HDFC Bank, which enjoy a very high percentage of the cheaper Casa (current and savings account) deposits, maintained a status quo keeping the savings rates unchanged.
HDFC Bank's Casa share in the total base fell to 46 percent as of June 30, versus 49.1percent a year ago on a lower growth in current account deposits.
However, there was a growth of 18.4 percent on savings deposits to 76,674 crore, according to Q1 numbers.
Puri said economic feasibility requires a balance of at least 7,000 in every savings account as a host of services are to be offered free of charge to the account-holder.
He recommended the fixed deposit route to all the depositors who want a larger interest rate on their deposits.