Jana Small Finance Bank on Thursday announced a new deposit scheme offering 6.75 per cent for tenors ranging from seven to 180 days. The rate is applicable for the minimum deposit amount of Rs 10 lakh for retail deposits up to Rs 3 crore; and above Rs 3 crore to Rs 200 crore for wholesale deposits.
The new plan offers features like T+0 (same day) redemption, availability of partial withdrawal facility and instant overdraft facility, the bank said in a statement, adding that there are no charges for early redemption.
“The product is designed to provide flexibility, which also offers better returns. There is no cost for early redemption or partial withdrawal. And we will pay the customer on the same day. In case of liquid mutual funds, settlement is T+1. If the customer does not want partial withdrawal, we will give overdraft,” Ajay Kanwal, MD and CEO, Jana SFB told Business Standard in a telephonic conversation.
The move comes at a time when banks are struggling to secure deposits amid healthy loan growth. Analysts have said higher stock market yields have attracted investors to put their funds into stocks and mutual funds, rather than bank deposits.
Despite offering higher rates, Jana SFB’s cost of funds will not increase, as most of the bank’s deposits have a maturity of more than one year and the cost of funds was 8 percent during the first quarter of the current financial year.
“For us, the cost of funds will come down. We don’t have any short-term ledgers. [deposit]98 percent of our deposits are for more than one year. I didn’t accept short-term deposits in the past and I don’t have short-term loans. But now, in the last two years, we are doing supplier financing, supply chain financing, which are all short-term, with a term of 90 to 180 days. So, now I can easily match that. [with these short term deposits]“, Kanwal explains.
“I think the market needs to realise that customers are more interested in short-term deposits,” Kanwal added.
First published: September 19, 2024 | 19:43 IS
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