'We will grow faster than the industry'

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Shobhana Subramanian, Anita Bhoir : Mar 30 2011, 02:13 IST

Aditya Puri, managing director, HDFC Bank, believes that deregulating the savings rate at a time when liquidity is tight may not help anybody and says there is unlikely to be any price discovery or innovation. The chief of India’s most consistently profitable bank tells Shobhana Subramanian and Anita Bhoir that if rates are deregulated, charges too would need to be freed.

Your thoughts on the deregulation of the savings rate...

We need to be clear about why we are deregulating savings rate. Presumably it’s because we say every other rate is deregulated so this also should be deregulated. In a scarcity situation, every participant in that industry is competing with each other. It’s just like if you do an oil price deregulation when the price is at $50-60 a barrel, you would not have a problem. However, at $110 per barrel you will have a problem. You are maintaining tight liquidity at this point in time so if you must deregulate rates, you should first wait for market conditions to normalise.

The RBI has said that deregulation would facilitate price stability and innovation. What do you have to say on that?

I don’t know what innovation it facilitates. As far as interest rate on savings accounts are considered, overseas nobody is giving 3.5%. Today the rate on a 30-day deposit is 4% with no ATM card, no cheque book, no cash withdrawal at my counter. As a banker I would prefer this as the cost of maintaining a savings account is very

... contd.

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