Savings bank deposits with HDFC Bank and Axis Bank can fetch an interest of 3.5% per annum. Clearly, small banks are banking on higher interest rates to attract depositors. “Small finance banks are offering higher rates because they are looking to aggressively build their deposit franchise. Their business model allows them to do so,” says Sumit Madan, Head, Branch Banking, AU Small Finance Bank.A bank deposit is a huge source of comfort for small depositors. The launch of differentiated banks, particularly in the backdrop of the benign interest rate scenario that prevailed until recently, fares well for investors scouting higher interest rates.

Source: Economic Times May 14, 2018 00:56 UTC