New Delhi, May 7 (UNI) Expressing concern at the recent phenomenon of Commercial Banks offering high interest rates in the closing months of the current fiscal, Finance Minister P Chidambaram today said the Indian Banks Association(IBA) was looking into the issue.
The remarks of the Finance Minister came during a Calling Attention Motion moved in the Lok Sabha by CPI veteran Gurudas Dasgupta on the need to increase the interest rates of small savings in Post Offices to bring these at par with Banks.Members said Public Sector Banks (PSBs) attracted deposits at interest rates as high as 13 to 14 per cent in February and March last to get larger deposits, apparently in a bid to improve their figures for total business and improve their balance sheets.
Mr Chidambaram said the IBA has set up a Committee to look into the entire issue, which would soon submit its Report.
He said he had raised the subject during his last meeting with the CEOs of PSBs and had asked them to desist from such practices.
The Members said competition among Banks-- which was virtually like a bidding process-- had resulted in phenomenally high interest rates being offered by the Banks.
Mr Dasgupta, as also some others, argued that it was strange that while a depositor, mostly Corporates, got such high interest rates for putting their money in the Banks, the interest rate on small savings had remained where it was. Small savings schemes were instruments used by the poor and not so rich among the middle class, they said.