|Special schemes where a depositor has to keep funds with the bank for exactly a specific number of days have got a new lease of life. With banks having little room to increase rates on regular fixed deposits, banks are looking to easen their liquidity condition by increasing interest rates on such deposits and long duration deposits.
Bank of Baroda recently announced revision of its rates on deposits by 0.25 to 0.65%. The bank also introduced a special term deposit of exactly 1111 days with a card rate of 9.15%, higher than 9.00% for 3-10 years deposits.
Both public and private sector banks are offering such special deposits to their customers, one of the senior manager of a PSB stated that the major attraction of such deposits is that they offer higher interest rates than regular deposits.
UCO Bank offers 9.25% on 444 days deposits 15 basis points higher than 1-2 years deposits, the bank has also increased the cap of maximum amount for deposits at Rs. 5 crore. Central Bank of India also revised interest rates on special deposits by upto 25 basis points.
RBI in 2007 had asked banks to stop special schemes as they were discriminatory, it had said "No bank should discriminate in the matter of interest paid on deposits, between one deposit and another, accepted on the same date and for the same maturity, whether such deposits are accepted at the same office or at different offices of the bank."
As of 27th July the banks deposits grew by 13.8%, which is below the RBI's projection of 16% in monetary policy for FY13. Both the banks and the regulator are worried about slower growth of deposits viz-a-viz credit growth.