Banks should be transparent if they offer differential interest rates on deposits, the Reserve Bank of India Governor Sanjay Malhotra said in a post-policy press conference on Friday.
“We have a very consistent and a very clear policy for deposits as to when they can have differential rates. I think for certain categories of people, like senior citizens, depending on tenor, you can have differential rates,” Malhotra said in response to a question on whether the regulator is comfortable with banks offering different interest rates.
“But they have to be transparent at the same time. You have to display them to everyone clearly, and any differential rate beyond that is certainly, if someone is giving, is certainly not acceptable,” he added.
He comments came after the Indian Express reported on May 27 that the HDFC Bank camouflaged interest rate differential as marketing expenditure.
According to the report, the bank’s audit committee had ordered an internal vigilance investigation into payments totalling around Rs 45 crore made to the Maharashtra State Road Development Corporation (MSRDC) during FY24 and FY25. The payments were allegedly routed through the bank’s marketing department as contributions towards road safety campaigns instead of being recorded as interest payments. The report claimed the mechanism was used to compensate MSRDC for a differential interest commitment above the bank’s standard savings deposit rates.
TOPICSRBIThis article was first uploaded on June six, twenty twenty-six, at forty-seven minutes past one in the night. © The Indian Express (P) Ltd