In India, the interest rate on savings accounts in all the nationalised commercial banks is fixed by?
- Union Ministry of Finance
- Union Finance Commission
- Indian Banks’ Association
- None of the above
Explanation
Option (d) is correct
- Prior to 2011, the interest rate on savings bank accounts in nationalised commercial banks was regulated by the Reserve Bank of India.
- The Reserve Bank of India (RBI) deregulated savings bank deposit interest rates on October 25, 2011. Since then, individual banks have the freedom to determine their own rates with the following conditions:
- Uniformity: A bank must offer a uniform interest rate on savings account balances up to ₹1 lakh, regardless of which branch the account is held in.
- Differential Rates: For balances above ₹1 lakh, banks are permitted to offer differential interest rates based on the amount in the account.
- Approval: Rates must be determined with the approval of the bank’s Board of Directors or its Asset-Liability Management Committee.
- It was not fixed by the Ministry of Finance, the Finance Commission or the Indian Banks’ Association.
