Question

Impact of rate of saving account on performance of banks

Answer 1

· On these deposits, from May 1, SBI will be offering interest rate of 2.75 percent or 275 basis points (bps) below repo rate, according to the bank's website. ... This means that savings accounts with balances less than Rs 1 lakh will continue to earn 3.5% interest as per the current rate fixed for these accounts.

Answer 2

Answer:

As interest rates rise, profitability on loans also increases, as there is a greater spread between the federal funds rate and the rate the bank charges its customers. ... This is an optimal confluence of events for banks, as they borrow on a short-term basis and lend on a long-term basis.