How to choose a bank for a savings account?

Amidst all the chaos surrounding Yes Bank. The “aam aadmi” is now concerned about their deposits. Turns out that the highest interest rate, low monthly minimum balance, mobile banking, etc. aren’t the only things to consider while opening an account.

Following are the potential signs of red flags that should also be considered:

1. Declining stock price: Investors generally sense fishy affairs early. The stock price is considered to be a good proxy for a company’s performance. Check for the stock price in the last 1 year, if it is in a downward trend, its a potential red flag.
2. Return on assets: This ratio gives information about the profits being generated from each rupee of the invested asset. Check whether this is ratio is consistent over the years or at least increasing in line with the market peers.
3. Credit to deposit ratio: It tells us what is the amount of credit being extended for each rupee of deposit. A ratio within 100% is considered to be ideal.

These are some basic checks that can be applied before opening any sort of retail deposit account.

PS: Yes bank, failed in all these aspects.