Saving bank deposit

The SB deposit are commonly and widely used by a majority of people irrespective of their economic status, across the country.It is an important component of bank deposit base, as the funds mobilized under this category are more stable and and cost effective as compared to term deposits.At present , the SB deposit continue about 22 percent of the total deposits of the banking industry.
A major share of the SB accounts pertain to household which are subjected to unfair treatment with regard to interest rate; this is evident from the fact SB interest rates have remained the same since 2003.The approach of the banks and the regulator has acted as a disincentive to small savers,who are the backbone of the resource mobilisation.
Normally,the depositors expects to be compensated for the time value of money as well as cover the associated risks viz ,inflation,systematic and regulatory risks.Inflation play a vital role when arriving at the real interest rates it has a direct bearing on the purchasing power of the depositor.
With the improving financial literacy and further penetration of capital market activity,banks are likely to lose this stable source of funds unless they treat depositor fairly.