Banking Sector Update; RBI discussion paper on savings deposit rate: Emkay

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Banking

RBI discussion paper on savings deposit rate

n     Discussion paper seeks comments on the right time and form of deregulation of SB deposit rate

n     Trying to find balance between the costs and benefits on deregulation for both banks and the customers

n     Deregulation may take time as political consensus may be required. May start with a cap and floor on rates

n     History suggests that competition may not heat up immensely. Impact on NIMs higher for HDFCB, ICICI, SBI and PNB but base rate mechanism to take care of the same