What changed
The RBI increased the savings deposit rate for domestic, ordinary Non-Resident, and NRE accounts by 0.5 percentage point, from 3.5% to 4.0% per annum. This was done via an amending directive to the earlier 1987 directive on deposit rates. All other existing instructions on deposit rates remain unchanged.
What it means for you
Urban co-operative banks must now offer at least 4.0% per annum on savings deposits, including NRE accounts, up from 3.5%. This will increase their cost of funds on these deposits. Banks need to update their systems and communicate the new rate to depositors immediately.
What you must do
- Update savings deposit interest rate to 4.0% per annum for domestic, ordinary Non-Resident, and NRE accounts with immediate effect.
- Amend Annexure-I and Annexure-II of the 1987 directive as per the enclosed amending directive.
- Acknowledge receipt of this circular to your respective Regional Office.
- Communicate the rate change to all relevant branches and depositors.
Who it affects
All Primary (Urban) Co-operative Banks, Depositors holding domestic savings accounts, Depositors holding ordinary Non-Resident savings accounts, Depositors under the Non-Resident (External) Accounts Scheme
What is the new savings deposit rate for urban co-operative banks?
The new rate is 4.0% per annum, effective May 3, 2011, up from 3.5%.
Does this apply to NRE savings accounts as well?
Yes, the rate increase applies to both domestic savings deposits and savings deposits under the Non-Resident (External) Accounts Scheme.
Are any other deposit rates changed by this circular?
No, only the savings deposit rate for domestic, ordinary Non-Resident, and NRE accounts is increased. All other instructions remain unchanged.