Reserve Bank of India (RBI) is in favour of deregulating savings bank deposit rates of banks, RBI Deputy Governor KC Chakrabarty said on Thursday.
"We have initiated a debate in the last policy..., the deduction is very clear, clear in favour of deregulating all interest rates, including savings bank. But the decision will be taken, when to do that, after having adequate debate on the issue," Chakrabarty said on the sidelines of a banking event.
He does not expect the savings bank rate to move in a wide range after the deregulation.
"This is a highly competitive market. Prices do not vary much. But what will be the rate, what customers will get, will depend on market conditions," he added.
The savings bank rate is at 3.5 per cent and is the only administered rate in the banking system now.
The banks offer this rate to the savings bank customers, which form a major part of their low-cost deposit base.
The Reserve Bank of India has started to deregulate administered interest rate from 1991 as a part of financial reforms.