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

Land digitisation and India

The World Bank’s Ease of Doing Business report 2019 ranks India at 166 out of 190 countries in ‘Registering Property’, lower from last year’s ranking of 154. This, in spite of a 53-place jump in India’s overall ranking in the last two years alone!  

“India has huge potential to improve the account usage”

Financial inclusion can fuel the economic growth of a country. In conversation with Rahul Trivedi, Dr Pawan Bakhshi, of the Bill & Melinda Gates Foundation, talks about its India specific programmes which aim to broaden the reach of low-cost digital financial services for the poor. Edited excerpts:

Easing birthpangs

Most of us have paid at least one visit to a health facility. It is easy to identify quality care when we receive it – an attentive doctor, a responsive team of health workers, adherence to hygiene and safety protocols, and so on. Unfortunately, not everyone has access to high quality care, a situati

Eliminating tuberculosis within a generation

Published ahead of World TB Day (24 March 2019), The Lancet Commission on Tuberculosis estimates that there are significant financial benefits of reducing TB mortality. With the country shouldering one-fourth of the global burden and a predominant number of patients accessing care in the private sector, th

India a year unhappier

India is unhappier than ever before. The United Nation`s World Happiness report 2019 has ranked India at the 140th position from the previous 133 in 2018, dropping seven spots in just a year and 23 positions since 2015.   Out of the total 156 countries that were covered, India`s

On the line

Releasing a booklet on the railways achievements in the last five years, railways minister Piyush Goyal may have painted a rosy picture, but that does not subtract from its many troubles, chief among which is its worsening operating ratio.   The ratio is of working expenses to tr



Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter