Pay interest at shorter intervals, charge for SMS alerts on usage basis: RBI
RBI allows banks to pay interest at shorter intervals and charge for SMS alerts on usage basis
“As all commercial banks are now on core banking platforms, it has been decided to give banks the option to pay interest on savings deposits and term deposits at intervals shorter than quarterly intervals,” RBI Governor Raghuram Rajan said in its Second Quarter Review of Monetary Policy 2013-14.
Presently, banks are required to pay interest on savings and term deposits at quarterly or longer intervals.
The savings deposit rate for most banks is 4 per cent per annum, while in some cases, it is as high as 7 per cent. The interest rate on savings bank accounts is calculated on a daily basis. Term deposit rates are 8-9 per cent for tenures of one year and above.
In 2011, the RBI decided to give freedom to commercial banks to fix savings bank deposit rates, the last bastion of the regulated interest-rate regime.
While giving banks this freedom, the RBI had said a uniform rate will have to be offered on deposits of up to Rs 1 lakh. On higher amounts, banks are allowed to offer differential rates to depositors.
Also, RBI asked banks to charge customers for transaction SMS alerts on the basis of usage, instead of imposing a fixed fee, to ensure equity and be reasonable.
“Banks are advised to leverage the technology available with them and the telecom service providers to ensure that such (SMS) charges are levied on all customers on actual usage basis,” the Reserve Bank of India said in its Second Quarter Review of Monetary Policy 2013-14.
It said fees based on actual usage are necessary to ensure reasonableness and equity in charges levied by banks.
In March 2011, the RBI had set guidelines for banks to send online alerts to customers for all types of transactions, irrespective of the amount. However, the central bank had not issued rules on charging customers for these alerts.
Earlier in the year, State Bank of India imposed an annual charge of Rs 60 for SMS alerts, a step followed by lenders such as Canara Bank.
Other PSU banks have also been levying a fee for SMS alerts.