RBI amends some provisions on interest rate on deposits

Mumbai: The Reserve Bank of India has amended certain provisions related to reference rate provider and eligibility for opening saving accounts in its master directions on interest rates on deposits for scheduled commercial banks and co-operative banks, the central bank said in a notification.

Accordingly, banks will now use the reference rate displayed by Financial Benchmarks India Pvt Ltd for arriving at interest rates on foreign currency nonresident (bank) deposits or popularly known as FCNR(B) deposits.

Existing provisions required banks to use reference rate such as the overnight alternative reference rate for the respective currency or swap rates quoted or displayed by Foreign Exchange Dealers Association of India.

The RBI today also said that banks should not open a savings deposit account in the name of government departments or bodies depending upon budgetary allocations for performance of their functions or municipal corporations or municipal committees or panchayat samitis, any political party, or entities other than individuals, Karta of Hindu Undivided Family, and organisations listed in schedule - I.

The central bank explained that for the purposes of this clause, political party means an association or body of individual citizens of India, which is, or is deemed to be registered with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968.

All other instructions in this regard remain unchanged, RBI said.