I hope that the cost-efficiency of running virtual banks would prompt these financial institutions to provide better deposit rates than banks here are currently doing (MAS studying whether to allow virtual banks here, May 8).

At present, many banks offer next to nothing in that regard, with interest rates of a mere 0.05 per cent per annum.

So a depositor with $5,000 in his savings account would receive interest of $2.50 after one year, barely enough for a simple meal.

Depositors are hungry for yield to hedge against ever-rising inflation and make their hard-earned savings last longer.

Recently, quarterly results show that banks are making billions of dollars, yet interest rates for the average depositor remain low.

There needs to be adequate competition among banks to provide a better deal for depositors.

The government could perhaps nudge the banks in that direction.

That said, proper safeguards still need to be instituted for virtual banks, and the rules and regulations governing them should be the same as for existing banks to create a level playing field for all.

S. Nallakaruppan