Medium-, long-term deposit rates increase

Lower-income households often have no other investment choices, and low deposit returns actually dent their already-low disposable income, said Wu.

Low bank rates also force many savers to speculate for higher returns, putting money into real estate, art and even garlic bulbs, which actually adds risk to their portfolios, said Wu.

The central bank's recent move to abolish the lending rate floor, which was 70 percent of the benchmark rate, reconfirmed policymakers' determination to push financial sector reform, which is expected by the market. It is also an essential step to the liberalization of interest rates.

The scrapping of the loan rate floor won't have much impact on bank lending rates, as banks don't compete on loan pricing and rarely lend at the floor rate. Therefore, the real economy may not get lower funding costs, and economic growth may not benefit much from this move, according to a recent Barclays Research report.

Before the abolition of the rate floor, benchmark loans cost 6 percent to 6.55 percent, according to PBOC data.

Removal of the savings rate cap, which has been widely discussed, may take more time, said analysts. "We believe the deposit rate ceiling move is a key and risky step for interest rate liberalization and it will have an impact on banks' behavior and banks' net interest margins," said May Yan, an analyst with Barclays Research.

Deposit rate liberalization is conditional on many other things, including corporate governance improvement and deposit insurance, as well as an exit system for financial institutions.