"Banks should pay interest on monthly basis on Savings Accounts & Deposits of over Rs. 151,00,000 Crore available with banks" urged IIF Prof. Aman Agarwal

Prof. Aman Agarwal (Director, Indian Institute of Finance) welcomes the decision of Reserve Bank of India (RBI) to have accommodative stance by keeping the policy (interest) rates unchanged despite the changes in interest rates affected in some of the countries.

Prof. Agarwal in a letter to the RBI Governor, Shri Shaktikant Das and the Finance Minister Shrimati Nirmala Sitaraman, has urged that RBI to consider the payment of interest on Savings Deposits accounts and Term Deposits on monthly basis. Most of the Savings Accounts and Term Deposits are held by Women, Senior Citizens, BPL Families and the middle class including those of 44 Crore Jan-Dhan account holders.

Monthly interest paid on savings/term deposit accounts will encourage people to keep money in Savings A/c including Long Term Deposits and discourage cash holding. This will also encourage digitalization as being promoted by the Government. The amount of over Rs. 151 Trillion (Rs. 151,00,000 Crore i.e. Rs. 99,00,000 Crore in PSB and Rs. 52,00,000 Crore in Private Banks in April 2021) kept in Savings Account / Term Deposit Accounts. These deposits are usually after paying all tax dues, hard earned money and deserves due credit. Technically deposits in banks are cheapest source of funds and risk free. Banks are custodian of people money. It is like loans taken by banks from the depositors and hence an equitable level playing field must be projected by banks, RBI in National Interest as well as Social Interest.

However Prof. Aman Agarwal feels that the banks are adopting unfair practices of giving interest on a quarterly basis on Savings Deposit Accounts and Term Deposits to crores of depositors while charging interest on Loans (Personal/Home/ Vehicle/ Retail etc) through EMIs on Monthly basis.

There is enough liquidity in the system and the yearly provisional results of almost all banks including the largest bank - State Bank of India are showing gigantic profits despite frauds of Crores of Rupees as per newspaper reports and 7-8% of NPAs. This is a clear exploitation of the common man, the poor and the middle class of India.

This policy change would provide much needed relief to crores of people without any financial burden on the exchequer and help revive the Indian economy emphasized Prof. Agarwal.

Indian Institute of Finance
45 A, Knowledge Park III,
Greater Noida 301210,
NCR Delhi, INDIA

Prof. Aman Agarwal is currently Professor of Finance and Director, Indian Institute of Finance (IIF), educated at Columbia University (New York, USA), London School of Economics (LSE London, UK), IIF, University of Delhi and has had a short stint at The World Bank (Washington DC, USA) earlier. He is Executive Editor of Finance India - The Quarterly Journal of Finance. He is a keen researcher, author, a teacher and economic commentator on various TV / Radio Channels and in Magazines / Newspapers.

This release was published on openPR.