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Impact of Change in Deposit Interest Rates on Total Deposits of Bank

In: Business and Management

Submitted By notsaurabh
Words 739
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Impact of change in Deposit Interest Rates on Total Deposits of Branch

Introduction-. The main function of a bank is to accept deposits & do advances . Attracting more & more deposits eventually increase the customer base of the branch & once the customer starts associating himself with the branch, he would like to cater to all its financial requirements through the same branch. Whether it may be its car , housing . business or education needs. In order to work on this particular aspect State Bank Of Bikaner & Jaipur (SBBJ ) , Ranchi Branch wanted to increase its total deposits with a special emphasis on the personal segment growth . The total deposits of the branch under different segments as on 31/03/2011 is shown in the table below : Segment Amount In Lacs C&I TOTAL DEP 2,213.54
SIB TOTAL DEP 280.39
AGR TOTAL DEP 1.12
PER TOTAL DEP 2,387.14
TOTAL 4,882.19

It is evident from the above table that the share of PER Total Deposit as a percentage of total deposit is 48% as compared to the C&I Deposit which is 45% .It had a good product mix, but being located at a main market place i.e. at Pee Pee Compound we had a good potential for growth .

Problem Statement –
To increase the Total Deposit of the branch by 15% in the next six months .
Application to solve the problem -
We have tried to increase the Total Deposits of the branch by
Increase Fixed Deposit Rate of Interest – We increased the Rate of Interest on deposit in Sept. from 12.25% to 11%

Return On investment - Jun-11 Jul-11
Deposit Amt. 100000 100000
Rate Of Interest 9.25 9.75
Time Period in months 24 24
Maturity Value 120069 121248
Return On Investment(ROI) 20069 21248

In order to calculate the return in investment & to make our analysis simpler , we have calculated the maturity value of Rs 1.00 lacs for...

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