But the general industry feedback to the RBI talk on freeing interest rates has been pretty positive. Bankers and those connected with the banking industry feel that customers will benefit from such a move.

Nani Javeri, managing director of TimesBank, for instance, welcomes any initiative to deregulate the financial sector. Javeri says that TimesBank supports any move to deregulateinterest rates for savings accounts. According to Javeri, interest rates will move bandwise thanks to the move. ``Low value and high transaction accounts, being less profitable for banks, will earn a lower rate of interest,'' he adds. ``Conversely, accounts having higher balances or accounts having fewer transactions will attract better interest rates,'' says Javeri.

Javeri also explains that the cost of funds for banks is a function of not only the interest that they pay, but also their operating costs. He says: ``Efficient banks, which manage their operating costs effectively, will be in a position to offer better rates.''

Javeri points out that interest is not everything for a customer. ``It is only one factor in the selection of a bank,'' he says, and then elaborates: ``Product features, the service quality levels of the bank, as well as the delivery channels provided by it play an equally important role in the customer's decision to opt for a bank.''

A senior manager of Punjab National Bank agreesthat freeing of the interest rate on savings account is a step in the right direction. At present, though the rate of interest is pegged at 4.5 per cent for savings accounts, cost to the banks is much lower-around 2 per cent, the PNB official says. He explains that many times, customers withdraw money from their savings account in the middle of the month, thereby cutting the banks' cost towards interest.

But now if deregulation of interest rates for savings accounts happens, banks will hike interest rates to attract more customers, the PNB official adds. Since these days, the general trend is towards putting money into a short-term fixed deposit or in a two-in-one account to avail of both higher interest and liquidity, freeing the interest rate on savings accounts will reverse the trend a bit, says the PNB official. In the long run, therefore, both customers and banks will benefit from the deregulation of rates on savings accounts.

Customers will benefit from the move because they won't need to go forshort-term fixed deposits or two-in-one accounts to gain a bit in interest, says the PNB official. If savings accounts start offering interest higher than 4.5 per cent, customers will certainly stick to savings accounts for a long time, rather than shifting to FDs and 2-in-1 accounts, he says.

Similarly, freeing interest rates for savings accounts will lower the burden on banks, which have to pay higher interest on short-term FDs and 2-in-1 accounts, adds the official.

Another expert in the banking affairs, Vijay S Mehta, chief consultant, Consult Opportune, India's first personal finance consultancy firm, says that deregulation will be of benefit to the majority of the people. Because of competition between various banks, it's the customers who will benefit finally.

But does he think banks will hike interest rates on savings accounts? Mehta says that it is difficult to predict which way the interest rates will go. ``It will depend a lot on how the country performs in other areas,'' he says. Forinstance, inflation due to oil rates could be one influencing factor, he says. Generally, says Mehta, the feeling is that interest rates will come down once deregulation comes in. But, says he, it's all speculation and the interest rates could be variable.

However, Mehta sums up that the new free regime will also change the existing concept of loyalty towards a bank. ``Service and what's there for me'' will be the thumb rule for every bank customer. Therefore, it's about time that you get ready to shop around and choose the best bank of them all.