The Reserve Bank of India has allowed banks to offer differential interest rates on term deposits depending on whether they are with or without premature withdrawal facility.
In a circular to banks, the RBI said all term deposits of individuals (held singly or jointly) of Rs 15 lakh and below should, necessarily, have premature withdrawal facility.
For all term deposits above Rs 15 lakh, banks can offer deposits without the option of premature withdrawal as well.
“However, banks that offer such term deposits should ensure that at the customer interface point the customers are, in fact, given the option to choose between term deposits either with or without premature withdrawal facility,” the RBI said.
According to the RBI, 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.