Banks may soon pay you more interest if you deposit above ₹15 lakh in a fixed deposit without premature withdrawal.

The Reserve Bank of India on Thursday said banks will have the discretion to offer differential interest rates based on whether the term deposits are with or without premature-withdrawal facility.

While all term deposits of individuals (held singly or jointly) of ₹15 lakh and below should necessarily have premature withdrawal facility, the RBI said for all term deposits above this amount banks can now offer ‘the without premature withdrawal’ option.

“Banks want sticky deposits. Hence, they will pay more interest to depositors who exercise the option to not prematurely withdraw their deposits,” said a senior public sector bank official. When it comes to bulk deposits, banks hitherto faced uncertainty as depositors could redeem their deposits whenever better deployment opportunities cropped up, before the maturity date.

Now with the ‘without premature withdrawal’ option, banks can plan their resource deployment well.

Bulk deposits So far, banks could quote differential rates of interest for deposits of the same maturity on bulk deposits of ₹1 crore and above. In its latest notification on interest rate on deposits, the RBI said banks should disclose in advance the schedule of interest rates payable on deposits — all deposits mobilised by banks should be strictly in conformity with the published schedule.

Banks should have a board-approved policy with regard to interest rates on deposits, including those with differential rates of interest. And, they should ensure that the interest rates offered are reasonable, consistent, transparent and available for supervisory review/scrutiny as and when required.

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