RBI Again Gives Freedom To Banks

Banks can now pay higher rates for deposits without premature withdrawal option-Hindu Business Line-16th April 2015
April 16:  

Banks may soon pay you more interest if you deposit above ₹15 lakh in a fixed deposit without premature withdrawal.

The Reserve Bank of India on Thursday said banks will have the discretion to offer differential interest rates based on whether the term deposits are with or without premature-withdrawal facility.

 

While all term deposits of individuals (held singly or jointly) of ₹15 lakh and below should necessarily have premature withdrawal facility, the RBI said for all term deposits above this amount banks can now offer ‘the without premature withdrawal’ option.

“Banks want sticky deposits. Hence, they will pay more interest to depositors who exercise the option to not prematurely withdraw their deposits,” said a senior public sector bank official. When it comes to bulk deposits, banks hitherto faced uncertainty as depositors could redeem their deposits whenever better deployment opportunities cropped up, before the maturity date.

 

Now with the ‘without premature withdrawal’ option, banks can plan their resource deployment well.

Bulk deposits

So far, banks could quote differential rates of interest for deposits of the same maturity on bulk deposits of ₹1 crore and above. In its latest notification on interest rate on deposits, the RBI said banks should disclose in advance the schedule of interest rates payable on deposits — all deposits mobilised by banks should be strictly in conformity with the published schedule.

Banks should have a board-approved policy with regard to interest rates on deposits, including those with differential rates of interest. And, they should ensure that the interest rates offered are reasonable, consistent, transparent and available for supervisory review/scrutiny as and when required.

 

Soon, deposit money into your account from any bank's cash machine!-DNA

The Reserve Bank is looking at connecting all cash deposit machines to the National Financial Switch (NFS) which will make them interoperable and allow customers to deposit cash into their accounts from any bank's machine.

"ATMs are already part of the NFS and now there is a proposal from National Payments Corporation (NPCI) to link all cash depositing machines to the NFS. This will allow any other bank customers to put in money from any machine," RBI Deputy Governor H R Khan told reporters.

Khan, who inaugurated Dena Bank's self-service e-Smart facility here, also said that the idea is to encourage alternate banking channels for day-to-day transactions.
When asked about the ATM interchange fee about which bankers have an issue, he said it is being discussed at the banks' level and the RBI has allowed them to take a decision on it.
"But one thing you must remember that any technology or initiative has to be profitable, particularly in the initial phase. If you are not able to recover the cost then they will not have incentive to expand all these alternate channels. So, you have to strike a balance between profit and convenience," Khan said.

He further said that RBI has also increased its focus on cyber security in the wake of increasing instances of phishing.

"We are concerned about cyber security and are focusing on it. Banks have been alerted and the IBA is also taking initiative on cyber security front," he added.

Recently, the central bank had issued a public advisory against an app (application) which is doing rounds on messaging app 'WhatsApp' purportedly to facilitate checking of bank balance.
"The Reserve Bank wishes to clarify that it has not developed any such application. Members of public are, therefore, advised to use the application, if at all, at their own risk," RBI had said.

On issuing payment bank licences, Khan said the applications are being scrutinised.
Dena Bank today opened its 16th e-smart facility which gives customers access to anytime banking. The bank plans to increase e-smart facility to 200 by the end of the fiscal, its CMD Ashwani Kumar said.

When asked about the threat that RBI Governor Raghuram Rajan has received via an e-mail bearing the name of terror outfit ISIS, Khan refused to comment.