SBI denies rate cartelisation

SBI chief financial officer (CFO) Diwakar Gupta said yesterday the business of banks and companies might be hit due to over-regulation.

Gupta added reports of the competition regulator looking at whether banks were collaborating to ensure interest rates on savings accounts did not rise were making the industry tentative.

He said the day deregulation happened, the bank had said it would never be the first to raise rates. He said if rates were moved up 1 per cent, it cost the bank $1 billion. He said SBI would never do it because nobody else did it, adding this could be construed as cartelisation.

The Times of India  had  reported earlier this week that the Competition Commission of India(CCI) had decided to investigate the uniform 4 per cent interest rate being paid by all public sector banks on savings bank accounts despite the rate being deregulated by the  Reserve Bank of India (RBI) in October 2011.

In its monetary policy review in October 2011, RBI had allowed banks to fix their own interest rates on savings accounts, and large banks like SBI, HDFC Bank Ltd and ICICI Bank Ltd were still offering a uniform 4 per cent interest rate on savings accounts.

Kotak Mahindra Bank Ltd, Yes Bank Ltd and IndusInd Bank Ltd had hiked their savings bank deposit rates and Yes Bank was offering 7 per cent interest if the daily average deposit was over Rs1 lakh and 6 per cent on deposits below that amount.