The Reserve Bank of
India (RBI) with effect from October 22, 1997 has permitted commercial
banks to decide the rates of interest payable on domestic term deposits
of various maturities with the prior approval of their respective Board
of Directors/Asset Liability Management Committee. The banks are now
free to offer any interest rate on domestic term deposits according to
their cost structure with the approval of their board.
The RBI has also deregulated the rates of interest payable on saving
bank deposits w.e.f. 25th October, 2011. Banks are now free to determine
their interest rate on savings bank deposits subject to:-
(i) Each bank will have to offer a uniform interest rate on savings bank
deposits up to Rs. 1 lakh, irrespective of the amount in the account
within this limit and
(ii) For savings bank deposits exceeding Rs. 1 lakh, a bank may provide
differential rates of interest, if it so chooses, subject to the
condition that banks will not discriminate in the matter of interest
paid on such deposits, between one deposit and another of similar
amount, accepted on the same date, at any of its offices.
Scheduled Commercial Banks are regulated by the RBI which has permitted
them to decide on the rates of interest payable as explained above.
There is no felt need to issue guidelines for uniformity in rates of
interest on deposits, payable by banks.
This was stated by the Minister of State for Finance, Shri Namo Narain
Meena in written reply to a question in the Rajya Sabha today.
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