The country’s largest lender, State Bank of India (SBI), has recommended the Reserve Bank of India (RBI) that banks pay an interest of up to 2% on current accounts.
Speaking to a leading business news channel on Tuesday, SBI chairman Pratip Chaudhuri, said non-payment of interest on current accounts is an oppressive market practice. “As RBI has shown boldness in opening up the saving bank interest market, similar attempt should be made in the current account interest market,” he added.
Ahead of the RBI monetary policy meeting scheduled for January 29, SBI has requested the central bank for a 100 basis point cut in cash reserve ratio (CRR) and 50 basis point cut in repo rate. He said rate cut that the bank is recommending is aimed at boosting investor sentiment and kick starting the investment cycle which has gone into the slowdown mode. Chaudhuri indicated the monetary policy transmission mechanism for SBI has been very closely connected and directly proportional to RBI’s signals.