[kartickv]

Not many in India would see things the way you do. Why lose interest if you can get it, particularly if you don't have more interest coming in from mutual funds or someplace else? If anything, the competition is on to see who'll pay more interest. One payments bank announced 7%: http://economictimes.indiatimes.com/wealth/personal-finance-...

[Retric]

What's the post inflation adjusted interest rate? Because simply moving your money to a low inflation currency does the same thing.

The only catch is that the payments banks, which do not offer loans and several other facilities offered by full fledged rivals, are not allowed to accept deposits beyond Rs 1 lakh in bank accounts, which will have the same number as your mobile number. Bharti Airtel chairman Sunil Bharti Mittal said that the higher interest rate and freebies such as life insurance of up to Rs 1 lakh was an "introductory offer" and the rates would go down in a falling interest rate environment

Ahh, nm. This is just a fixed amount of cash they hand you for switching banks not a full time interest rate.

[kartickv]

Moving money to a low inflation currency sounds good in theory, but is not an accessible solution to the average Indian, and is fraught with bureaucracy and fees even for those it is accessible to. I put my money in a liquid fund (debt mutual fund) to earn 8% nominal interest rate. That's a much more practical solution than moving it to dollars, say.

Airtel's offer may be temporary, and interest rates rarely go to 7%, but the point is that there's always a competition on interest rates.

India's inflation and nominal interest rates are both higher, which means you lose more if you forgo interest. In a hypothetical country with 5% inflation and a 5% interest rate, if you forgo interest, you lose 5% every year. In a country with 2% inflation and 2% interest rate, you lose only 2%.