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

Reality As It Is: The Buddha`s advice on overcoming bias, prejudices

‘See Things As They Are’: Life Lessons from the Buddha Edited by Nanditha Krishna Aleph, 98 pages, Rs 399 There is a wonderful idea behin

World growth expected to face inflation pressures

World GDP forecasts for 2023 have been revised down again as central banks intensify their fight against inflation and the outlook for China’s property market deteriorates, says Fitch Ratings in its latest Global Economic Outlook (GEO) report. Fitch now expects world GDP to grow by 1.4

200+ bird species documented in Chhattisgarh’s first-ever survey

Nine species of owls (including the magnificent spot-bellied eagle-owl), 10 birds of prey, 11 species of Woodpeckers (including white-bellied woodpecker – the largest woodpecker in peninsular India), and many other species have been documented during a first-ever bird survey in Chhattisgarh.

Cyclists plan ‘memorial ride’ to press demand for infrastructure

Cycling is a passion for many, and it is a way to fitness too. With rising numbers of vehicles on the road, the government encourages this environment-friendly mode of transportation, but it comes with numerous challenges. An accident last month on the Mahipalpur flyover of south Delhi, which took the life

“World headed towards stagflation; India must take care of the poor”

As the post-pandemic fallout and geopolitical uncertainty slows down global economies and sanctions against some nations, energy crisis and inflation are adding to the troubles, India is projected to be decoupled from world economy and fare better. To check if this belief really holds water, in the latest

The changing nature of CSR in India

With the advent of globalization came a new set of challenges for corporations, notably the duty of ensuring the well-being of all stakeholders while also protecting the planet`s natural environment. Although we are dedicated to a faster and more inclusive rate of growth, it is equally imperative that we f

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter