NRIs are not eligible get the benefit of recent Savings Bank interest rate deregulation.
All Savings Bank Account holders including NRIs are under the impression that, they are all eligible to get the benefit of the recent Savings Bank account interest deregulation by RBI. But this thinking is wrong. As per RBI Circular , "Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review". RBI Circular is given below for your information
With Regards
Prakash Nair
Revised Guidelines on Deregulation of Savings Bank Deposit Interest Rate
circular no. DBOD.Dir.BC. 42/13.03.00/2011-12, dated 25-10-2011
1. Please refer to our Directive DBOD.Dir.BC.89/13.03.00/2010-11 dated May 3, 2011
2. As indicated in the Second Quarter Review of Monetary Policy announced on October 25, 2011, it has been decided to deregulate the savings bank deposit interest rate with immediate effect. Accordingly, the following Guidelines will be effective from October 25, 2011:
• Banks are free to determine their savings bank deposit interest rate, subject to the following two conditions:
- First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount in the account within this limit.
- Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.
3. The above revised Guidelines would be applicable to savings bank deposits of resident Indians only.
4. Interest rate on Non-Resident (External) Accounts Scheme and Ordinary Non-Resident Deposit under savings account, which has been prescribed at 4 per cent per annum at present, will continue to be regulated until further review.
5. An amending directive DBOD.Dir.BC.41/13.03.00/2011-12, dated October 25, 2011 is enclosed (Annexure)
Annexure
Deregulation of Savings Bank Deposit Interest Rate
DIRECTIVE DBOD.DIR.BC. 41/13.03.00/2011-12, DATED 25-10-2011
In exercise of the powers conferred by section 35A of the Banking Regulation Act, 1949 and in partial modification of its directive DBOD.Dir.BC.89/13.03.00/2010-11 dated May 3, 2011 , the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that banks are free to determine their savings bank deposit interest rate for resident Indians only with immediate effect subject to two conditions. First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount in the account within this limit. Second, for savings bank deposits over Rs. 1 lakh, a bank may provide differential rates of interest, if it so chooses.
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