For bank customers, the increase in real interest income is irrelevant. This may be true for all bank customers, from the poorest to the richest. If you are the type of customer to a savings account has an average balance of one lakh, then you will make about 166 extra a month, when the dust settles. This is not an amount that is important to you. If your average balance is 2000, then will be richer on the left (if the word) of 3.34 per month and no one to whom money matters. If indeed the money in a savings account in which the small change that matters to you, then you probably do not exist. Otherwise, you would have heard of fixed deposits.

Unfortunately, the change, that things so few customers probably a big problem for some banks. It 'possible that some banks - especially those with relatively low interest rate of deposits from one of war and make it the cornerstone of your marketing efforts. This may have already begun.

As a result, others may be forced to follow. Even small changes in the saving rate could have a huge impact on the financial statements of major banks who rely on their legacy for savings deposits. It is a curious situation. An increase in the rate of savings could actually be a problem for many of the largest banks without making a significant benefit to individual customers.

And 'for this reason, I think it unlikely to see a general upward revision of savings. If a number of large banks simply refuse to raise its interest rate by a significant (or any) the amount, it may not have much impact on the customer's discretion. Products such as term deposits, customers shop around for the best prices, because the results are rather a feature of the product only, and are based on the fact that the selection was made. Contrast, the interest is far from the only (or even most important) feature of a savings account.

Customers want the convenience, functionality, accessibility and many other properties. Many of them are not even choose. They passively go along with how their salaries account is, or where the salary of a first job was. In large parts of the country, and yet there is not much choice as to which bank to go for your banking needs. Overall, a free savings should be considerably less than a revolution.

Source: ET