The repo rate - the rate at which RBI lends money to banks overnight - by the central bank used as a benchmark for signaling interest rates. While all other rates, including time deposits, is decided by the banks, the return of SB (savings) accounts established by the RBI. The survey is the fixed deposit interest rates (4%) low, although the cost of customer service has decreased due to technology. Meanwhile, the real return to depositors is negative, while inflation is more than double the rate of savings deposits.

The study was conducted by Ashish Das, Department of Mathematics, IIT Bombay. In the past, a study by Das had led the central bank to change the method of calculating interest on savings deposits from a minimum balance in the month to a daily interest calculation. Now Das said the savings banks almost Rs 36.000 cr in interest payments, and account holders do not receive their due.

Research shows that on average there are about 13 lakh crore from Rs stationed in SB deposits and around Rs 4.5 million lakh rupees of deposits in current accounts over the past 12 months. These current accounts and savings deposits are called "deposits" or CASA and are popular with banks as a source of low-cost funds. According to Das, although applicants are free to withdraw funds at will, on average, 92% of total bank deposits SB remains with the bank throughout the year. Given the current rate prescribed by RBI in savings deposits, the banks pay about Rs 48,000 crore a year.

Now, if depositors banks to provide a return equal to what they pay for deposits of one year, which on average is about 7%, he would pay 84,000 million rupees in these deposits. "The main reason that the depositors' money has no greater interest is the choice of the RBI to give the balance of Rs 36,000 crore to the banking sector to maintain its profitability and to subsidize their costs," says the report. According to Das, the minimum rate for savings deposits can be approximately half the repo rate. The system can be favorable to consumers by the percentage rate rounded to the whole.

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Bankers believe that it is possible to increase the return on savings deposits. However, all the big banks have received a full version of the savings because they believe it can trigger a series of war upstart banks, which have little to lose. Bankers also admit that technology is much more profitable and that the money is likely to lie no more depositors to the bank account used for electronic payment services.

Source: TOI