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RBI decides to deregulate savings bank deposit interest rates

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The Reserve Bank of India (RBI) today announced that it had decided to deregulate the savings bank deposit interest rate with immediate effect.

This means banks are free to determine their savings bank deposit interest rate, subject to two conditions, RBI Governor D Subbarao said at a press conference here to unveil the Second Quarter Review of Monetary Policy for 2011-12, which also included Developmental and Regulatory Policies.

The two conditions laid down by the central bank are:

  • First, 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.
  • Second, for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses. However, there should not be any discrimination from customer to customer on interest rates for similar amount of deposit

To provide enhanced banking services in Tier 2 centres, the RBI has proposed to permit domestic scheduled commercial banks (other than Regional Rural Banks) to open branches in such centres (with population 50,000 to 99,999) without the need to take permission from the Reserve Bank in each case, subject to reporting.

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