What changed
The savings deposit rate for co-operative banks was increased by 0.5 percentage points, from 3.5% to 4.0% per annum. This covers domestic savings deposits, ordinary Non-Resident savings deposits, and savings deposits under the Non-Resident (External) Accounts Scheme. The change took effect immediately on May 3, 2011.
What it means for you
Co-operative banks must now offer 4.0% on eligible savings deposits, up from 3.5%. This will increase their interest cost on these deposits, potentially compressing net interest margins unless lending rates are adjusted. The hike aligns co-op bank savings rates with the broader banking system and may attract more savings deposits from customers.
What you must do
- Update savings deposit interest rates to 4.0% per annum for domestic, ordinary NRO, and NRE accounts immediately.
- Communicate the rate change to all branches and ensure system updates are completed.
- Review deposit pricing strategy to manage impact on net interest margins.
- Acknowledge receipt of this circular to the respective RBI Regional Office.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), Customers holding domestic savings accounts, Customers with ordinary Non-Resident savings deposits, Customers under NRE savings accounts
Does this rate hike apply to all savings deposits at co-operative banks?
Yes, it applies to domestic savings deposits, ordinary Non-Resident savings deposits, and savings deposits under the NRE Accounts Scheme. Other deposit categories remain unchanged.
When did this new rate become effective?
The new rate of 4.0% per annum became effective immediately from May 3, 2011, the date of the circular.
Are there any other changes to deposit rate instructions?
No. All other instructions on deposit rates issued earlier remain unchanged, as per the circular.