THIRUVANANTHAPURAM: A whopping Rs 3,000 crore flowed into the state treasury savings bank (TSB) accounts in January ahead of an interest rate cut for short-term and fixed deposits.
Even after the rate cut, TSB rates are higher than commercial banks, attracting investors in large numbers.
According to Additional Chief Secretary (Finance) Rajesh Kumar Singh, the savings bank of treasuries had a safe-haven appeal as evident from the rush of depositors. He said the government had advantages and disadvantages with the deposits.
“Benefit is in terms of liquidity support. But it has an adverse impact on borrowing space,” he said. TSB accounts have over Rs 12,000 crore as fixed deposits.
Economist and former director of Gulati Institute of Finance and Taxation Prof D Narayana opined that the increase in treasury deposits was a reflection of the national trend in the banking sector.
“In Kerala too, the pandemic hasn’t affected the rich though the poor have become poorer,” Rajesh Kumar said.
Kerala’s economy is not credit-driven and the pandemic failed to make a big impact on the income of the salaried class, pensioners and a majority of non-resident Keralites, Narayana said.
“The interest rate offered by TSB accounts was well above the commercial banks, an offer too hard to resist,” he said.