Finance companies will soon start accepting savings deposits after the regulator the Central Bank gave them clearance from February this year. Finance companies, that have been asking to be allowed to raise savings deposits for years, will however have to cap their interest rates on these deposits to the weighted 3 month Treasury bill rate in the preceding quarter.
Industry players are busy setting up the systems to start accepting deposits in direct competition with commercial banks.
Monetary Board approved licensed finance companies accepting savings deposits in late January.
Till then the 27 registered and Central Bank regulated finance companies were only allowed to accept time deposits.
Finance companies have not yet started canvassing savings deposits but a few have submitted sample savings books to Central Bank for regulator approval.
The non-bank financial institutions supervision department of the Central Bank says they expect these companies to start raising savings deposits soon in competition with commercial banks.
However finance companies, that have seen commercial banks eating in to their lines of business, wil