Local banks should pay more interest on deposits

On June 13, the United States Federal Reserve adopted its seventh interest rate hike since December 2015. And, there are already projections of two more rounds of increases this year, as well as four in the next (Markets hit as Fed ups rate, warns of further hikes; June 15).

Meanwhile, our three-month Singapore interbank offered rate (Sibor) has risen from around 0.45 per cent in December 2014, to 1.52038 per cent following the latest hike. However, our largest local bank DBS continues to pay a paltry interest rate of 0.05 per cent up to a deposit amount of $250,000. This, even as the Sibor has risen by more than 1 per cent in the period highlighted.

As we continue to see a wave of big businesses growing larger by way of mergers and acquisitions, many have too much power now relative to consumers, workers and even governments (think tech companies and their outreach and influence).

Given DBS/POSB's large deposit base made up mostly of the everyday man's savings accounts, it should look beyond a bottom-line perspective.

We are not asking for charity, but reasonableness. An additional hundred dollars in interest, for instance, will do much for the large number of low-income depositors.

Peh Chwee Hoe

A version of this article appeared in the print edition of The Straits Times on June 25, 2018, with the headline 'Local banks should pay more interest on deposits'. Print Edition | Subscribe