In the debate on savings bank rate deregulation (May 11) the argument for “yes”, ironically made by the managing director of YES Bank, spoke highly of the possibility of great things happening for savings bank account-holders with deregulation. The milder “no” version was more forthright and practical. Rana Kapoor has not bothered to consider the large majority of savers who have small average balances and senior citizens for whom innovative products make less sense. Any new financial innovation will only help those with sizeable savings accounts who can afford the accompanying charges. At the same time, the possibility of levying charges for various services will more than eat away any higher interest rate following deregulation, which will only hurt small savers. The support for deregulation will come only from those who look to make a killing from levying service charges and throwing small crumbs by way of a slightly higher rate of interest. Aditya Puri is forthright in concluding that it will be good for the common man to have a regulated savings account. What is needed, as the RBI governor has boldly done in the recent monetary policy announcement, is to revisit the interest rate scenario at every review and fix savings bank interest rates suitably.
S Ravindranath, Coimbatore
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