The Reserve Bank of India has revised the rules for bulk deposits, offering differential interest rates, which would be applicable with effect from April 1.

The RBI said that a bank, on request from a depositor, would allow withdrawal of a term-deposit before completion of the period of the deposit agreed upon at the time of making a deposit.

“The bank shall have the freedom to determine its own penal interest rate of premature withdrawal of term deposits. The bank shall ensure that the depositors are made aware of the applicable penal rate along with the deposit rate,” the RBI said in a notification.

However, the RBI said that the bank, at its discretion, would disallow premature withdrawal of large rupee term deposits of Rs.1 crore and above. “The bank should, however, notify such depositors of its policy of disallowing premature withdrawal in advance, at the time of accepting such deposits.”

The permission to offer varying rates of interest for deposits of the same maturity would apply to single rupee term deposits of Rs.1 crore and above. Banks can charge different rates of interest only on bulk deposits of above Rs.1 crore and above compared to the previous limit of Rs.15 lakh and above.

“Banks may, therefore, offer the same rate of interest or differential rates of interest for deposits of Rs.1 crore and above of the same maturity. For deposits below Rs.1 crore of the same maturity, the same rate will apply. Rupee term deposits shall include domestic term deposits as well as term deposits under NRO and NRE accounts.”

Banks should disclose in advance the schedule of interest rates payable on deposits, including deposits on which differential interest will be paid. Interest rates paid by the bank should be as per the schedule and should not be subject to negotiation between the depositor and the bank, the RBI added.

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