Banks to offer differential rate for term deposits

Interest rate will depend on kind of withdrawal facility availed by the customer

GN Bureau | April 16, 2015


#RBI   #reserve bank of India   #term deposits   #interest rate   #premature   #withdrawal  

The differential interest rates based on whether the term deposits are with or without the premature withdrawal facility come to India.

The Reserve Bank of India (RBI) has given green signal to banks to offer differential interest rates on deposits, allowing earning of higher interest rate if one goes for deposit without premature withdrawal facility. RBI said that banks can now offer early withdrawal of term deposits and differential interest rates can be offered to customers if they opt for such a feature. Customers who don't choose early withdrawal of their term deposits can be offered a different interest rate on their deposits.

Currently, banks do not follow any uniform code on whether to charge penalty on premature withdrawal of fixed deposits.

RBI also said that all term deposits of individuals held singly or jointly of Rs 15 lakh and below should have premature withdrawal facility. Besides that banks have been allowed to offer deposits without the option of premature withdrawal as well.

The regulator, however, said that banks which offer such term deposits should ensure that the customers are given the option to choose between term deposits with or without premature withdrawal facility.

Banks have been asked to disclose in advance the schedule of interest rates payable on deposits. They should also 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 and available for supervisory review/scrutiny as and when required, the RBI said.

Banks are expected to announce their differential interest rates on such deposits.

Since January 2013, RBI had allowed banks to offer such differential interest rates on deposits that were less than, equal to, or over Rs 1 crore.

Comments

 

Other News

Celebrating the spirit woman with UN designated 14th Edition of the International Women’s Day Awards

Public Diplomacy Forum, in association with Tatsat Foundation, Business World and Governance Now is hosting "International Women`s Day Awards" for the true celebration of "STREE SHAKTI." This is a much-anticipated calendar event in New Delhi in its 14th edition which is a celebration of

BFSI Needs Military-grade Cybersecurity Solutions to Detect the Most Advanced Attacks: Deloitte

In such unprecedented times, businesses are facing different kinds of risk, which has

“New guidelines suppress digital, social media, and OTT platforms”

The government’s recent notification to regulate digital media is an attempt to suppress all social media platforms including digital news platforms, Dr. Shama Mohamed, Congress Spokesperson, has said. Only digital news platforms are able to say what they want to say, so the government

Covaxin Phase 3 clinical trial shows 81% efficacy

India’s first indigenously produced Covid-19 vaccine, Covaxin, has shown an interim efficacy of 81% in Phase III trials for preventing the virus. Covaxin has been developed in India jointly by the Indian Council of Medical Research (ICMR) along with Bharat Biotech International Limited (BBIL). &

In Mumbai, 29 private hospitals join vaccination drive

In order to expand the vaccination drive, the centre has allowed 29 private hospitals in Mumbai not empanelled in central and state health schemes to be designated as Covid Vaccination Centres (CVC). After a virtual meeting with the chief minister and the BMC commissioner Tuesday evening, th

Spectrum auction concludes; response better than expected

India on Tuesday concluded the spectrum auction after a total of six rounds of bidding. The authorities described the response as better than expected, with total bids valued at Rs 77,814.80 crore. The quality of service and customer experience is expected to improve with deployment of additional spectrum

Visionary Talk Series with Dr. Shama Mohamed On the present state of Governance



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter