The Reserve Bank of India (RBI), on Tuesday, asked banks to have a board-approved transparent policy on pricing of liabilities and they should also ensure that variation — between retail and bulk — in interest rates on single term deposits of ‘Rs.15 lakh and above’ and other term deposits is minimal.

“Banks are offering significantly different rates on deposits with very little difference in maturities. This suggests inadequate liquidity management system and inadequate pricing methodologies,” the RBI said in a notification.

Varation in rates

“There are wide variations in banks’ retail and bulk deposits rates, making it unfair to retail depositors,” the RBI had said in its last annual policy statement.

The Reserve Bank of India had permitted banks, in 1998, to offer, at their discretion, differential rates of interest on single term deposits of Rs.15 lakh and above, subject to the condition that the schedule of interest rates payable on deposits, including deposits on which differential interest was paid, was disclosed in advance and not subject to negotiation between the depositor and the bank.

Earlier, the RBI had also stipulated that banks should not discriminate in the matter of interest rate paid on deposits, except in respect of fixed deposit schemes specifically meant for resident Indian senior citizens and single term deposits of Rs.15 lakh and above.