Differential deposit rates worrying RBI

The Reserve Bank of India (RBI) is unhappy with the differential treatment being meted out by banks to their high-value customers.

“Banks should curb the practice of differential interest rates between high-value customers and small customers. For instance, banks are offering higher rates for customers parking say over `1 crore. These kinds of practices should be stopped and (they should) start giving uniform rates for deposits,”  RBI deputy governor K C Chakrabarty said on the sidelines of an event on Thursday.

Also, banks are differentiating on the deposit rates for different tenures, he said.

“We are directing banks to curb customer differentiation. The banks should be aware about it and the boards must be deciding it in a particular fashion to do away with intense customer differentiation. If they do not listen to us, we will see what should be the next step,” he said.

Customer differentiation is an unhealthy practice and leads to exploitation of people from small and vulnerable sections, said Chakrabarty, reiterating the central bank’s focus on financial inclusion.

Banks should take adequate measures to support RBI’s effort to give more people access to the banking system, he said.
“Banks should not deny a bank account to anyone who has a valid ID and clears KYC norms,” said  Chakrabarty.

“The poor have to pay more everywhere in the world as they are more vulnerable. Our current emphasis at this stage is the access to service. Then, the competition will bring down the prices,” said Chakrabarty, urging banks to improve customer service.