What changed
RBI removed the administered savings bank deposit interest rate, allowing banks to set their own rates for resident Indian depositors. A uniform rate is mandatory for deposits up to Rs.1 lakh, while differential rates are permitted for deposits above Rs.1 lakh, provided no discrimination exists for similar deposits on the same date. NRE and NRO savings account rates remain regulated at 4% per annum.
What it means for you
Banks gain pricing flexibility on savings deposits, enabling competitive rate setting to attract or retain funds. The uniform rate requirement for deposits up to Rs.1 lakh protects small savers from discrimination. For larger deposits, banks can offer tiered rates, potentially increasing deposit competition and impacting net interest margins.
What you must do
- Review and set savings bank deposit interest rates for resident Indians, ensuring uniform rate for deposits up to Rs.1 lakh.
- Implement systems to apply differential rates for deposits over Rs.1 lakh without discriminating between similar deposits on the same date.
- Communicate new rate structure to all branches and update product documentation and systems accordingly.
- Continue applying the regulated 4% rate on NRE and NRO savings accounts until further RBI review.
Who it affects
All scheduled commercial banks excluding RRBs, Resident Indian savings account holders, Bank treasury and product teams, Deposit operations and compliance departments
Can we offer different savings rates for different customer segments?
Yes, but only for deposits above Rs.1 lakh. For deposits up to Rs.1 lakh, you must offer a uniform rate to all customers. For higher deposits, differential rates are allowed as long as you do not discriminate between deposits of similar amount accepted on the same date at any branch.
Does this deregulation apply to NRE and NRO savings accounts?
No. The deregulation is only for resident Indian savings accounts. NRE and NRO savings account interest rates remain regulated at 4% per annum until further RBI review.
When did these guidelines take effect?
The guidelines became effective immediately from October 25, 2011, the date of the RBI notification.