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Banks Rewrite Rules for Deposits Amidst Rising Competition
22 Feb
Summary
- IDFC First Bank led in CASA deposits at 51.6 percent in December.
- Banks are offering diverse interest rates on savings and current accounts.
- Intensifying competition is driving new strategies for attracting deposits.
The landscape of bank deposit acquisition is rapidly evolving as competition intensifies, compelling financial institutions to innovate.
In December, IDFC First Bank recorded the highest CASA (Current Account Savings Account) ratio at 51.6 percent. This was followed by Bank of Maharashtra with 49.54 percent and Central Bank of India at 47.13 percent. Other notable banks included IDBI Bank, J&K Bank, Kotak Mahindra Bank, and IOB, all demonstrating significant CASA figures as public sector banks continue to historically outperform private ones in this metric.
The strategies for attracting deposits are becoming increasingly diverse. While some banks offer a modest 2.5 percent on savings accounts, others are providing much higher rates, up to 6 percent or more. Furthermore, the frequency of interest payments is varying, with some banks opting for monthly payouts instead of quarterly. Even current accounts, which typically do not earn interest, are seeing innovative reward mechanisms introduced by certain institutions.
