The Hindu Business Line : BoI to accept 7-14 day deposits

As advised by the Reserve Bank of India in the mid-term review of its annual policy statement 2004-05, Bank of India has decided to accept domestic rupee term deposits below Rs 15 lakh in maturity bucket of `7-14 days', effective November 1.

The interest rate on such deposits would be 3 per cent per annum, and the minimum amount to be placed would be Rs 1 lakh, said a press release.

"Earlier, we were not accepting deposits in this maturity. But now anyone who has short term funds can place it with us and earn an interest, instead of keeping the funds idle", said a BOI official.

A few other banks are also understood to be considering the introduction of the deposit scheme.

Earlier, while the minimum maturity of wholesale domestic term deposits was seven days, the maturity for `retail' domestic term deposits continued to be 15 days.

In order to provide uniformity in the tenor of the term deposits, the RBI had recently suggested in its mid-term review of the annual policy statement 2004-05, that banks can at their own discretion, reduce the minimum tenor of retail domestic term deposits under Rs 15 lakh, to seven days from 15 days.

The apex bank has said that banks would continue to have the freedom to offer differential rates of interest on wholesale domestic term deposits of Rs 15 lakh and above, as at present.

Until recently, the lowest maturity available for domestic term deposits with most banks was the `15-45'-day category, which attracted an interest rate of between 3.75 per cent and 4 per cent across various banks.

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