COMPARATIVE STUDY OF INTEREST RATE OF DIFFERENT BANKS

SHANTI K. M.

B.Ed Student(Mathematics)

Mount Carmel College of Teacher Education, Kottayam

ABSTRACT

The study is conducted to know about the Interest rate of different loans and deposit
schemes offered by banks in Kerala. For this the researcher collected data from SBT, Canara
bank and Federal bank. The study revealed that public sector banks are providing high level
interest rate for different deposit schemes. The private sector banks are providing low level
interest rate for different deposit schemes. Public sector banks are recurring high level interest
rate of different loan and advances. All the private and public sector banks are using
mathematical tools for the calculating interest rates.

INTRODUCTION

An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of
money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of
principal paid a certain number of times per period for all periods during the total term of the
loan or credit. Interest rates are normally expressed as a percentage of the principal for a period
of one year, sometimes they are expressed for different periods such as a month or a day.
Different interest rates exist parallelly for the same or comparable time periods, depending on the
default probability of the borrower, the residual term, the payback currency, and many more
determinants of a loan or credit. For example, a company borrows capital from a bank to buy
new assets for its business, and in return the lender receives rights on the new assets as collateral
and interest at a predetermined interest rate for deferring the use of funds and instead lending it
to the borrower.

Interest-rate targets are a vital tool of monetary policy and are taken into account when
dealing with variables like investment, inflation, and unemployment. The central banks of
countries generally tend to reduce interest rates when they wish to increase investment and
consumption in the country's economy. However, a low interest rate as a macro-economic policy
can be risky and may lead to the creation of an economic bubble, in which large amounts of
investments are poured into the real-estate market and stock market. In developed economies,
interest-rate adjustments are thus made to keep inflation within a target range for the health of
economic activities or cap the interest rate concurrently with economic growth to safeguard
economic momentum.

The study was conducted to know about the Interest rate of different loans and deposit
schemes offered by different banks in Kerala.

OBJECTIVES OF THE STUDY

1. To understand the interest rates of different loans and deposit schemes
2. To understand which bank has more interest rate for educational loan.
3. To understand which bank provide more agricultural loan.
METHODOLOGY

The researcher adopted survey method for the study. Both primary and secondary data
were collected for the smooth conduct of the study. An interview schedule was prepared for the
present study and primary data were collected from 20 persons working in three banks namely
SBT, Canara bank and Federal Bank and the secondary data from business magazines, websites,
journals etc. relating to the topic.
ANALYSIS AND INTERPRETATION

From the analysis of both the primary and secondary data the following interpretations
were made.

1. Interest Rate Scheme of Federal Bank , Canara Bank and SBT

Scheme SBT Canara bank Federal bank

Deposit Scheme Rate of interest Rate of interest Rate of interest
Saving deposit 4 4 4
Fixed deposit 5.5-7.25 4-7.5 5.5-9.25
Recurring deposit 10 6.75-9.2 6.75-9
Loan scheme
Home loan 9.95%-10.20% 9.68-9.75 10.25-10.75
Personal loan 13.20-13.45 10.5-15 15.25-18.48
Business loarn
a)term loan 9.95 10.75 10.38
b)bank loan 9.95 10.75 10.38
c)Bill discount 9.95 10.75 10.38
Educational loan 11.80-13.80 10.25-12.5 12.93-16.38
Gold loan 12.20% 13% 13-13.5
Vehicle loan(car) 10.45-10.70 11% 10.45%
Two wheeler loan 14.20-15.20 9.90-9.95 14.50-15.00
Loan against 13.20% 12.63% 12.50-12.75
insurance policy
Agricultural loan 7% 4.25-4.75 9.88-11.83

Loan against property 14.5-15.5 14.25-16.25 12.83-14.73

Loan against PPF 8.7% 8.7% 8.7%

2. Classification on the basis of savings bank interest rate

Table 2 showing the classification of savings bank interest rate

Name of Bank Rate of interest

SBT Bank 4%
Canara Bank 4%
Federal Bank 4%
From the above table it is evident that the saving bank deposit interest rates of the 3 banks are
the same.
3. Classification on the basis of fixed deposit interest rate
Table 3 showing the classification on the basis of fixed deposit interest rate

Name of Bank Rate of interest

SBT Bank 5.5%-7.25%
Canara Bank 4%-7.50%
Federal Bank 5.5%-9.25%
From the above table it is clear that Federal Bank offers more interest rate to customer for the
fixed deposit scheme .
4. Classification on the basis of Recurring deposit scheme interest rates
Table 4 showing the classification on the basis of recurring deposit scheme interest rates

Name of Bank Rate of interest

SBT 6-10%
Canara 6.75-9%
Federal 6.75-9%
From the above table it is clear that Public sector banks provide high interest rate for recurring
account holders.

Classification of home loan interest rate

Table 3.4 showing the classification of home loan interest rate

Name of Bank Rate of Interest

SBT 9.95%-10.20%
Canara 9.67%-9.75%
Federal 10.25%-10.75%
From the above table it is clear that Federal Bank offers more interest rate to customer for the
home loan scheme .

Classification of personal loan interest rate

Table 3.5 showing the classification of personal loan interest rate

Name of Bank Rate of Interest

SBT 13.20%-13.45%
Canara 10.5%-15%
Federal 15.25%-18.48%
From the above table it is clear that Federal Bank offers more interest rate to customer for the
personal loan scheme

Classification of term loan interest rate

Table 3.6 showing the classification of term loan interest rate

Name of Bank Rate of Interest

SBT 9.95%
Canara 10.75%
Federal 10.38%
From the above table it is clear that Canara Bank offers more interest rate to customer for the
term loan scheme

.Classification of bank loan interest rate

Table 3.7 showing the classification of bank loan interest rate

Name of Bank Rate of Interest

SBT 9.95%
Canara 10.75%
Federal 10.38%
From the above table it is clear that Canara Bank offers more interest rate to customer for the
loan scheme

Classification of bill discount interest rate

Table 3.8 showing the classification of bill discount interest rate

Name of Bank Rate of Interest

SBT 9.95%
Canara 10.75%
Federal 10.38%
From the above table it is clear that Canara Bank offers more interest rate to customer for the

bill discount scheme

Classification of educational loan interest rate

Table 3.9 showing the classification of educational loan interest rate

Name of Bank Rate of Interest

SBT 11.80%-13.80%
Canara 10.25%-12.5%
Federal 12.93%-16.38%
From the above table it is clear that Federal Bank offers more interest rate to customer for the
educational loan scheme

Classification of gold loan interest rate

Table 3.10 showing the classification of gold loan interest rate

Name of Bank Rate of Interest

SBT 12.20%
Canara 13%
Federal 13%-13.5%
From the above table it is clear that Fedaral Bank offers more interest rate to customer for the
gold loan scheme

Classification of vehicle loan interest rate

Table 3.11 showing the classification of vehicle loan interest rate

Name of Bank Rate of Interest

SBT 10.45%-10.70%
Canara 11%
Federal 10.45%
From the above table it is clear that Canara Bank offers more interest rate to customer for the
vehicle loan scheme

Classification of two veeler loan interest rate

Table 3.12 showing the classification of two veeler loan interest rate
Name of Bank Rate of Interest
SBT 14.20%-15.20%
Canara 9.90%-9.95%
Federal 14.50%-15.00%
From the above table it is clear that SBT Bank offers more interest rate to customer for the Two
veeler loan scheme

Classification of loan against insurance policy interest rate

Table 3.13 showing the classification of loan against insurance policy interest rate

Name of Bank Rate of Interest

SBT 13.20%
Canara 12.63%
Federal 12.50%-12.75%
From the above table it is clear that SBT Bank loan against insurance policy scheme providing
high level interest rate to customer

.Classification of agricultural loan interest rate

Table 3.14 showing the classification of agricultural loan interest rate

Name of Bank Rate of Interest

SBT 7%
Canara 4.25%-4.75%
Federal 9.88%-11.83%
From the above table it is clear that Federal Bank offers more interest rate to customer for the
agricultural loan scheme

Classification of loan against property interest rate

Table 3.15 showing the classification of loan against property interest rate

Name of Bank Rate of Interest

SBT 14.5%15.5%
Canara 14.25%-16.25%
Federal 12.83%-14.73%
From the above table it is clear that Canara Banks loan against property scheme providing high
level interest rate to customers.

Classification of loan against PPF interest rate

Table 3.16 showing the classification of loan against PPF interest rate
Name of Bank Rate of Interest
SBT 8.7%
Canara 8.7%
Federal 8.7%
From the above table it is evident that the rate of loan against PPF of the 3 banks are the same

FINDINGS

1)Rate of saving bank interest rate are same.

2)Federal Bank fixed deposit scheme providing high level interest rate to customer
3)Public sector bank providing high level interest rate recurrig account helders.

4)Federal Bank home loan scheme providing high level interest rate to customer.

5)Federal Bank personal loan scheme providing high level interest rate to customer.

6)Canara Bank term loan scheme providing high level interest rate to customer.

7)Canara Bank bank loan scheme providing high level interest rate to customer.

8)Canara Bank bill discount scheme providing high level interest rate to customer.

9)Federal Bank educational loan scheme providing high level interest rate to customer.

10)Federal Bank gold loan scheme providing high level interest rate to customer

11)Canara Bank vehicle loan scheme providing high level interest rate to customer.

12)SBT Bank two veeler loan scheme providing high level interest rate to customer.

13)SBT Bank loan against insurance policy scheme providing high level interest rate to customer

14)Federal Bank agricultural loan scheme providing high level interest rate to customers.

15)Canara Banks loan against property scheme providing high level interest rate to customers.

16)Rate of loan against PPF are same.

CONCLUSION

Public sector banks are providing high level interest rate of different deposit
schemes. But the private sector banks are providing low level interest rate of different deposit
scheme.Public sector banks are recurring high level interest rate of different loan and advances.
All the private and public sector banks are using mathematical tools for the purpose interest
calculations.

BIBLIOGRAPHY

1) Books
Banking financial service management-S.Arora, Anna university
Banking methodology methods and technique- S.Gaurav
2) Internet
3) Periodicals
1. Economics times of India