RBI frees interest on co-op banks savings accounts

The Reserve Bank on Monday deregulated interest rate on savings accounts in all State and Central Co-operative Banks, a move that will fetch better returns for depositors.

RBI had freed these rates for the scheduled commercial banks in October.

In a notification addressed to all State and Central Co-operative Banks, RBI said they are free to determine their savings bank deposit interest rate subject to two conditions.

Under the first condition, the notification said, “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“.

The other condition states that for savings bank deposits over Rs 1 lakh, a bank may provide differential rates of interest, if it so chooses.

This would, however, be subject to the condition that banks will not discriminate over the interest paid on such deposits, between one deposit and another of similar amount accepted on the same date, at any of its offices, it said.

Till now, cooperative banks were mandated to give 4 per cent interest rates on such deposits. The rate was increased from 3.5 per cent.

It also said 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.