Bundles of Indian one hundred rupee bills are pictured at a bank in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

CCI Rules Out Cartelisation Among Banks In Fixing Savings Interest Rates

The Competition Commission of India has ruled out cartelisation among banks in fixing savings interest rates, after finding that rates are based on independent assessment of market conditions rather than any collusive arrangement.

The fair trade watchdog examined the parallel behaviour of banks in offering similar savings bank interest rates (SBIRs) and levying similar service charges on a suo motu basis. It also looked at the role, if any, played by the Indian Banks' Association (IBA) in determining these rates and charges.

CCI was “prima facie satisfied” that under the aegis of the IBA, a majority of banks were acting in concert in relation to SBIRs and banking charges. Finding this in contravention of the Competition Act, the regulator had passed an order in January 2015 directing its investigation arm, the Director General (DG), to probe the matter and submit its report.

In a 20-page order, the CCI said that there is no reason to disagree with the findings of the DG as the material on record does not suggest any cartelisation amongst banks and/or the IBA, between 2011 to 2016. Accordingly, no case of contravention of the provisions of Section 3 of the Competition Act is made out, it added. The section pertains to anti-competitive agreements.

Among all the scheduled commercial banks (SCBs), the conduct of top ten banks whose savings bank account deposits accounted for about 70 percent of the total market as on March 31, 2016 was examined.

The banks included - State Bank of India Ltd. and its five associate banks, ICICI Bank Ltd., Punjab National Bank Ltd., Union Bank of India Ltd., Central Bank of India Ltd., HDFC Bank Ltd., Bank of Baroda Ltd., Bank of India Ltd., Canara Bank Ltd. and Axis Bank Ltd.

CCI noted that the investigation by the DG did not reveal any incriminating material to suggest cartelisation. The rates “offered by the banks are an outcome of their independent assessment of market conditions and not of any collusive arrangement”, it said.