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The Reserve Bank today asked state and central co-operative banks to ensure minimal variation in interest rates on single-term deposits of Rs 15 lakh and above and other deposits for corresponding maturities.
"It has been observed that there are wide variations in the interest rates offered by banks on single term deposits of Rs 15 lakh and above and those offered on other deposits (i.e. deposits less than Rs 15 lakh) of corresponding maturities," RBI said in a notification to these banks.
Stating that there was wide variations in the interest rates on single term deposits of corresponding maturities, RBI said banks should put in place a board approved transparent policy on pricing of liabilities.
RBI further said banks are offering significantly different rates on deposits with very little difference in maturities.
It said such practice of banks suggested "inadequate liquidity management system" and "inadequate pricing methodologies".
Banks are allowed to offer differential rates of interest on term deposits at their own discretion, on condition that they should disclose to the depositor in advance the schedule of interest rates payable on deposits, including deposits on which differential interest is paid.
"The Board/ALCO should ensure that the variation in interest rates on single term deposits of Rs 15 lakh and above and other term deposits (i.e. deposits less than Rs 15 lakh) is minimal for corresponding maturities," RBI said.
Source: EconomicTimes
"It has been observed that there are wide variations in the interest rates offered by banks on single term deposits of Rs 15 lakh and above and those offered on other deposits (i.e. deposits less than Rs 15 lakh) of corresponding maturities," RBI said in a notification to these banks.
Stating that there was wide variations in the interest rates on single term deposits of corresponding maturities, RBI said banks should put in place a board approved transparent policy on pricing of liabilities.
RBI further said banks are offering significantly different rates on deposits with very little difference in maturities.
It said such practice of banks suggested "inadequate liquidity management system" and "inadequate pricing methodologies".
Banks are allowed to offer differential rates of interest on term deposits at their own discretion, on condition that they should disclose to the depositor in advance the schedule of interest rates payable on deposits, including deposits on which differential interest is paid.
"The Board/ALCO should ensure that the variation in interest rates on single term deposits of Rs 15 lakh and above and other term deposits (i.e. deposits less than Rs 15 lakh) is minimal for corresponding maturities," RBI said.
Source: EconomicTimes
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