Co-op banks: Interest on savings a/c freed

The Reserve Bank of India (RBI) on Monday deregulated interest rate on savings accounts in all state and central co-operative banks, a move that would fetch better returns for depositors.

RBI had freed these rates for scheduled commercial banks in October. In a notification addressed to all state and central co-operative banks, RBI said these were free to determine their savings bank deposit interest rate subject to two conditions. On the first, the notification said, "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".

The other states for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses. This would, however, be subject to the condition that banks would not discriminate over the interest paid on such deposits, between one deposit and another of similar amount accepted on the same date, at any of its offices, it said.