RBI says banks must pay uniform interest rates

The Reserve Bank of India (RBI) on Tuesday issued a comprehensive Master Direction (MD) related to interest rate on deposits that has come into force with immediate effect. 

As per this MD, commercial banks are mandated to pay interest on deposits (other than current account deposits) accepted or renewed by them through a comprehensive policy on interest rates on deposits duly approved by the board of directors or any committee of the board to which powers have been delegated.

“The rates shall be uniform across all branches and for all customers and there shall be no discrimination in the matter of interest paid on the deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices,” MD said. 

Interest rates payable on deposits would be strictly as per the schedule of interest rates disclosed in advance. The commercial banks will need maintain the bulk deposit interest rate card in their core banking system to facilitate supervisory review. 

“The rates shall not be subject to negotiation between the depositors and the bank. The interest rates offered shall be reasonable, consistent, transparent, and available for supervisory review/ scrutiny as and when required,” RBI said in the MD. 

“All transactions, involving payment of interest on deposits shall be rounded off to the nearest rupee for rupee deposits and to two decimal places for FCNR(B) deposits,” it said. 

If a term deposit is maturing for payment on a non-business working day, banks will pay interest at the originally contracted rate on the original principal deposit amount for the non-business working day, intervening between the date of the maturity of the specified term of the deposit and the date of payment of the proceeds of the deposit on the succeeding working day. 

In case of reinvestment deposits and recurring deposits, banks will need to pay interest for the intervening non-business working day on the maturity value. 

Interest on domestic rupee savings deposits will be calculated on a daily product basis. A uniform interest rate would be set on balance up to ₹ 1 lakh, irrespective of the amount in the account within this limit. Differential rates of interest may be provided for any end-of-day savings bank balance exceeding ₹1 lakh, the MD said.