The Reserve Bank of India (RBI) has said that banks will have the discretion to offer differential interest rates for term deposits above Rs.15 lakh.
What else has the RBI said?
- All term deposits of individuals — held singly or jointly — of Rs.15 lakh and below should, necessarily, have premature withdrawal facility. All term deposits above Rs.15 lakh, banks can offer deposits without the option of premature withdrawal as well.
- Banks that offer term deposits should ensure that at the customer interface point, the customers are, in fact, given the option to choose between term deposits either with or without premature withdrawal facility.
- Banks are told to disclose in advance the schedule of interest rates payable on deposits.
- Banks are allowed to offer differential rates of interest on term deposits on the basis of tenor for deposits less than Rs.1 crore and on the basis of quantum and tenor on term deposits of Rs.1 crore and above.
- However, they are not permitted to differentiate on the basis of any other parameter of the deposit contract.
- RBI also said that banks should have a board approved policy with regard to interest rates on deposits including deposits with differential rates of interest and ensure that the interest rates offered are reasonable, consistent, transparent and available for supervisory review/scrutiny as and when required.
Sources: The Hindu.