Q.
For fixed deposits interest rate offered by the foreign banks is lower than that offered by their Indian counterparts. What is the reason? In this scenario how will they be able to compete with the Indian banks? Your views?
Asked by Good Citizen,
20 Feb '12 10:54 am
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Answers (5)
1.
Reserve Bank has given complete freedom to individual Banks to fix interest rates on their fixed deposit products. The focus of the foreign banks is not to mobilise deposits the way typically an Indian banking company would do. They concentrate on trade finance related activities like opening of Letters of Credit, Forex transactions, Bills Discounting, Negotiation etc. For availing these services, usually any business house would keep balance in their running accounts - current & savings accounts.
The profile of clientele banking with foreign Banks also would not mind foregoing a bit of interest, if they are compensated by superior services. These Banks do not cater, generally, to an average banking public, as their balance thresholds are more.
Since they do not depend on funds mobilised in India alone for lending activities and also they have a much superior CASA [Current & Savings Accounts] ratio to total deposits, they do not entice public with better inerest rates on th ...more
Answered by S. Ramesh, 20 Feb '12 01:29 pm
The profile of clientele banking with foreign Banks also would not mind foregoing a bit of interest, if they are compensated by superior services. These Banks do not cater, generally, to an average banking public, as their balance thresholds are more.
Since they do not depend on funds mobilised in India alone for lending activities and also they have a much superior CASA [Current & Savings Accounts] ratio to total deposits, they do not entice public with better inerest rates on th ...more
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3.
RBI has given free hand to banks to decide interest rates on deposits
Answered by saranathan Narasimhan, 01 Mar '12 03:56 pm
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Source: http://fsquarefashion.com/
Answered by heena dahiya, 28 Feb '12 10:07 am
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