Accordingly, RBI has given discretion to banks to offer differential interest rates based on whether the term depositsare with or without the premature withdrawal facility, subject to riders that:
I.Bank shall provide premature withdrawal facility for Fixed deposits made by Individuals (whether held jointly or singly) for an amount uptoRs. 15 lakh;
II.For fixed deposits above Rs. 15 Lakh, banks can offer deposits without the option of premature withdrawal as well (However, it would be obligatory on part of such banks to provide an option to customers to choose between term deposits either with or without premature withdrawal facility);
III.Banks should disclose in advance the schedule of interest rates payable on deposits; and
IV.The banks should have a Board approved policy relating to interest rates on deposits, including deposits with differential rates of interest and ensure that the interest rates offered are reasonable, consistent, transparent and available for supervisory review/scrutiny as and when required.