What changed
RBI removed the administered savings bank deposit rate, allowing RRBs to determine their own interest rates. A uniform rate must apply to deposits up to ₹1 lakh, while differential rates are permitted for amounts exceeding ₹1 lakh, provided no discrimination among similar deposits. The deregulation applies only to resident Indian depositors; NRE and NRO savings account rates remain regulated at 4% per annum.
What it means for you
RRBs gain pricing flexibility to compete for savings deposits, potentially improving margins or attracting more deposits. However, the uniform rate requirement on smaller balances caps differentiation for the bulk of retail savers. Banks must carefully calibrate rates to balance profitability and customer retention, while ensuring compliance with non-discrimination rules for larger deposits.
What you must do
- Review and set savings bank deposit rates for resident accounts, ensuring uniform rate on balances up to ₹1 lakh.
- Design differential rate structures for deposits above ₹1 lakh, ensuring no discrimination among similar deposits accepted on the same date.
- Communicate revised rates to all branches and update system parameters for interest calculation.
- Maintain separate compliance for NRE/NRO savings accounts, which remain regulated at 4% per annum until further notice.
Who it affects
Regional Rural Banks, Resident savings account holders, RRB treasury and product teams, Compliance departments of RRBs
Can we offer different savings rates to different customers?
Only for deposits above ₹1 lakh, and only if the deposits are of similar amount and accepted on the same date at any office. For deposits up to ₹1 lakh, the rate must be uniform across all customers.
Does this deregulation apply to NRE/NRO savings accounts?
No. The deregulation is only for resident Indian savings deposits. NRE and NRO savings account rates continue to be regulated at 4% per annum until further review.
When did this change take effect?
The deregulation and guidelines became effective from October 25, 2011, as announced in the Second Quarter Review of Monetary Policy.