Differential Rates For Deposits Above Rs 15 Lakh
The Reserve Bank of India (RBI) has set a floor of Rs 15 lakh, above which banks can offer differential rates of interest for the same maturity. While announcing the credit policy for the first half of this fiscal, the central bank has given banks the freedom to link interest rates with the quantum of funds placed with them.
The RBI has said: The permission to offer varying rates of interest for deposits of the same maturity shall apply to domestic term deposits of Rs 15 lakh and above. Banks may therefore offer the same rate of interest or differential rates of interest for domestic deposits of Rs 15 lakh and above. For domestic deposits below Rs 15 lakh of the same maturity, the same rate will apply. The central bank has also said that the new differential rates will be negotiated rate between bank and the depositors.
The guidelines state: Banks should disclose in advance the schedule of interest rates payable on deposits, including deposits on which differential interest will be paid. Interest rates paid by the bank should be as per the schedule and not be subject to negotiation between the depositor and the bank. The RBI has said that bank should announce the effective date of change in the policy at the earliest.
While several bank have announced revisions in their lending rates, most have not revised its deposits rates as they were waiting for the Reserve Bank to issue detail guideline on the quantum linked deposit.
Sources said that the State Bank of India has already put forward a proposal to this effect to its board, which is expected to be cleared by next Thursday.
Sources said that the SBI is likely to offer 50 basis more on deposits ranging between Rs 15 lakh to Rs 2 crore. The bank will offer an additional 25 basis points on deposits over Rs 2 crore.
Said Ramesh Mishra, chairman and managing director, Dena Bank: Our bank has already cut the prime lending rate and we are awaiting details on differential rates from RBI.
Meanwhile, the RBI has also issued circulars, operationalising the decision to reduce the minimum period of the maturity of domestic term deposits from 30 days to 15 days, the freedom to fix the penalty for premature withdrawal of domestic and NRE deposits, revised interest rate ceiling on FCNR(B) loans, renewal of overdue FCNR(B) and NRE deposits, revised lending rate on loans up to Rs 2 lakh, advances against domestic and NRE deposits, loans and advances against shares and debentures, penal interest rate on shortfall in maintenance of cash reserve ratio and statutory liquidity ratio, increasing the mark to market ratio to 70:30, reducing the minimum lock in period for certificate of deposits money market mutual funds from 30 to 15 days.