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Money lying idle in savings accounts to fetch more now

Money lying idle in savings accounts to fetch more now

The savings or the SB account, which fetched account holders a measly 4%, was the last bastion of administered pricing imposed by the banking regulator and sets the stage for competition among banks to attract more deposits by offering attractive interest rates to consumers.

MUMBAI: The money lying idle in your bank account will now fetch you more returns, with the Reserve Bank of India completely deregulating interest rates on Tuesday. The savings or the SB account, which fetched account holders a measly 4%, was the last bastion of administered pricing imposed by the banking regulator and sets the stage for competition among banks to attract more deposits by offering attractive interest rates to consumers.

The new system comes into effect immediately and would replace the existing one, which has been in place since 1978.

Within hours of the policy, private sector player, Yes Bank, increased the return on its SB accounts to 6%. Other banks with a relatively lower share of retail deposits such as IDBI Bank and Kotak Bank may follow suit in a bid to poach customers from rivals. Although the small banks lack the distribution network, they are likely to play the upstart by targeting salary accounts with the larger banks.

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