Differential deposit rates beyond RBI norms not acceptable: Sanjay Malhotra

RBI Governor Sanjay Malhotra says banks must remain transparent on deposit rates and cannot offer differential rates beyond categories permitted by the regulator

Differential interest rates on deposits offered by lenders to customers beyond the variations permitted by the regulator — based on factors including deposit tenor and customer categories — are not acceptable, RBI Governor Sanjay Malhotra said on Friday.

 

“We do allow differential interest rates. RBI has a very consistent and clear policy for deposits regarding when they can have differential interest rates. For certain categories, including senior citizens, and depending on the tenor, banks can have differential rates. However, they must be transparent at the same time. They have to display these rates clearly to everyone. Any differential rate beyond that, if someone is offering it, is certainly not acceptable,” Malhotra said at the post-policy press conference. 

   

Malhotra’s comments come days after a media report claimed that an internal probe by HDFC Bank, India's largest private sector lender, found that around ₹45 crore was paid to the state-run Maharashtra State Road Development Corporation (MSRDC) during FY24 and FY25 through marketing expenses classified as “differential interest”.

 

Denying any wrongdoing, HDFC Bank said: “The bank has robust internal oversight, audit, and control processes and systems.” 

 

“All issues are dealt with in accordance with the bank’s established norms, and full process is always followed before final determination after any internal review. We strongly reject any assumptions of wrongdoing or culpability based on selective material,” HDFC Bank said in a statement.

 

This comes close on the heels of the bank facing governance-related questions after its part-time chairman Atanu Chakraborty resigned in mid-March, alleging that certain “happenings and practices” at the lender were not in line with his values and ethics.

 

Typically, banks offer different interest rates on deposits depending on their tenor, while senior citizens are generally offered rates that are 50 basis points higher than those available to other depositors.