ICRA comments on interest on small saving schemes
Interest rates on most small savings schemes have been reduced by a limited 10 bps for the quarter starting July 1, 2017.
In the scenario of abundant liquidity that has prevailed over the last 8 months, the relative stickiness in small savings rates has not hindered a fall in banks’ deposit rates, unlike in previous phases of tighter liquidity.
Given the continuing and substantial liquidity surplus, liquidity management measures and rate action by the RBI are likely to emerge as the key drivers of deposit rate cuts in the ongoing year. However, the relevance of timely changes in small savings rates for policy transmission would re-emerge as liquidity moves closer to neutrality.
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Via:: Stock – India Infoline