Daijiworld Media Network – Mumbai

Mumbai, Jun 15: A fresh debate has emerged in the banking sector as several banks have raised deposit rates in recent days, bringing renewed focus to the manner in which lenders attract deposits amid slowing growth in savings mobilisation.

While concerns over sluggish deposit growth continue to challenge banks, attention has now shifted to another issue — the practice of offering incentives to entities for maintaining bulk deposits beyond the officially declared interest rates.

According to banking industry discussions, such incentives may include benefits offered outside the stated deposit rate structure. Experts point out that the practice violates the Reserve Bank of India's (RBI) deposit regulations as it creates unequal treatment among depositors, with some customers receiving advantages not available to others.

Critics argue that apart from being discriminatory, such arrangements raise concerns over transparency and governance, as hidden incentives can obscure the actual cost of funds for banks.

Addressing the issue during a post-monetary policy media interaction on June 5, RBI Governor Sanjay Malhotra clarified that while banks are permitted to offer differential interest rates on deposits in specific cases, such rates must be transparent and publicly disclosed.

Malhotra emphasised that all applicable rates should be clearly displayed and accessible to every depositor. Any undisclosed or selective incentive structure that effectively alters the interest rate for certain customers is “certainly not acceptable”, he said.

The remarks are being viewed as a strong signal from the central bank as it seeks to ensure fairness, transparency and regulatory compliance in deposit mobilisation practices.

With competition for deposits intensifying across the banking sector, RBI's stance is expected to reinforce the need for banks to maintain clear and uniform disclosure standards while attracting customer funds.