IDFC First Bank-2

My readers would recall my earlier post on IDFC Bank, celebrating their great initiative in abolishing all the charges relating to saving bank account. 

They must have felt buoyed by encouraging response to their above initiative to go a step further as evidenced from full page ad that has appeared in leading dailies. They have introduced auto sweep in from SB account, unlimited withdrawal from CA as long as balance is there, no minimum balance requirement, no penalty on FD breakage and FD breakage allowed in units of Re1. While most of the banks offer these products and features, IDFC offering is more lucrative and customer friendly. 

We all talk about disruption, but here’s IDFC Bank causing a big disruption in the market that should ensure faster than normal growth of CASA franchise for them. I am sure that they must have done their proper homework to assess the loss of income due to abolition of charges to be offset by additional float and business volumes. 

My best wishes to the team IDFC for a great journey ahead. Although I have no relationship of any sort with IDFC Bank, their initiative is something that’s very close to my heart. As a banker, I have always felt that deposit customers should be encouraged to save and offered other products without the Damocles sword of charges hanging on their heads. But everything free also carries the risk of people just opening another account for the heck of it and such accounts with small balances would then lie dormant, causing unnecessary and loss making baggage for the bank to carry in its books. However, with proper monitoring, customer engagement and cross selling, this could be a winning proposition for IDFC and I wish them well.