Deregulation of Savings Bank Deposit Interest Rate

RBI/2011-12/ 281
UBD.BPD.(PCB)CIR No. 13 /13.01.000/2011?12 November 25, 2011
The Chief Executive Officers
All Primary (Urban) Co-operative Banks

Dear Sir/Madam,
Deregulation of Savings Bank Deposit Interest Rate
Please refer to our circular No.UBD.BPD.(PCB)CIR No.45/13.01.00/2010-11 dated May 3, 2011 enclosing a Directive UBD.BPD.DIR. No.3/13.01.00/2010-11 dated May 3, 2011 on interest rates on deposits.
2. As indicated in the Second Quarter Review of Monetary Policy announced on October 25, 2011, it has been decided to deregulate the savings bank deposit interest rate with immediate effect. Accordingly, banks are free to determine, with immediate effect, their savings bank deposit interest rate, subject to the following two conditions:
o 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.
o Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.
3. The above revised instructions would be applicable to savings bank deposits of resident Indians only.
4. Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review.
5. An amending directive UBD.BPD.DIR. No. 4 /13.01.000/2011-12 dated November 25, 2011 is enclosed.

Yours faithfully
Chief General Manager-in-Charge
Encls: As above