Eyeing corporate deposits, State Bank of India (SBI) chief pitches for FDs of 3 days.
Country’s largest lender State Bank of India (SBI) is eyeing at corporate fixed deposits. Chairman of State Bank of India Mr. Pratip Chaudhuri also wants minimum tenure of fixed deposits (FD) to be reduced to three days so that companies can park their short term surplus funds with banks. He also wants 2 per cent interest paid on their current accounts.
“There are so many rigidities in banking regulation. Why should the minimum period of fixed deposits be seven days?”, asked Mr. Pratip Chaudhuri.
Banks are loosing the opportunity to tap the surplus funds of companies as currently the minimum tenure is of seven days. Companies prefer parking surplus funds with the liquid money market schemes of mutual funds because of certain facilities like the flexibility of no lock-in period and redemption in 24 hours.
Mr. Pratip also observed that companies such as Wipro, ITC, Hero Honda and Hindustan Unilever have surplus funds which they put in liquid scheme of a mutual fund rather than fixed deposit schemes as the lock-in period of minimum 7 days.
Mr. Pratip Chaudhuri has flagged the issue of reducing the tenure of FDs at a time when deposit accretion in facing a slowdown in the banking system.