http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/7-interest-on-savings-accounts-helps-smaller-banks-gain/articleshow/15987071.cms
Large banks may have refused to revise their interest rates on savings deposits, but there are clear signs that small banks that have raised interest rates have gained significantly.
Since the deregulation of savings deposit interest rate in October 2011, five private banks, 10 foreign banks and a co-operative bank have increased their savings deposit rate in the range of 100-500 basis points so far, according to RBI data. These banks have increased their share of savings bank deposits in the banking system from 1.8% to 2.1% in the post-deregulation period up to July 2012.
Neither large PSU banks like the SBI nor private lenders such as HDFC Bank and ICICI Bank have revised rates from 4%, which was mandated earlier. All these large banks say that they have not lost out on deposits.
The rationale behind CRR has been explained by RBI time and again. The point that Mr. Pratip Chaudhuri was making was that keeping such a large amount of cash without interest was affecting the profitability of commercial banks. Dr. Chakrabarty had responded by asking SBI to comply with the regulatory requirements or do business elsewhere. SBI has already submitted a proposal for opening two branches in Pakistan.Mr. Kamath and Mrs. Kochar of ICICI Bank maintains that CRR was there all the time. Those of you who were wondering as to how RBI makes profits now know where the profit comes from. RBI should use this money for strengthening the Banking system rather than pass it on to the government which compels Banks to lend money at rates below cost of funds and organizes collective defaults. Dr. Chakrabarti has to introspect and verify whether CRR or SLR had prevented his erstwhile employer Indian Bank from wasting tax payer money to the extent of INR 48 billion
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