RBI says too much disparity in deposit rates worrying

Reserve Bank Deputy Governor K C Chakrabarty on Thursday criticised tendency of banks to offer better interest rates to high-value deposits.

“I don’t understand why banks treat poor customers badly by offering lower rates on their deposits and reward the rich with higher prices. I am not saying both should be at par, but

the prevailing different rates are bit too high.

“We at RBI would want banks to offer more or less similar rates to all depositors, although a reasonable difference is fine,” the senior most deputy governor told a gathering at the

M R Pai memorial award function in Mumbai.

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Referring to the minimum balance requirement for savings accounts, and also the varying penalties for not maintaining the required balance, Chakrabarty said, “In fact banks are

charging this fee without giving any service to the customer.” Therefore, he said, RBI has made it mandatory for banks not to turn down anyone who wants to open a basic bank account, if he/she can provide the KYC documents.

On the service charges which banks make customers pay, Chakrabarty (who looks after customer service and banking operations at RBI among other things) said these charges are in fact “survival charges and not service charges”.

On the need to discourage gold consumption, he said there is a crying need to raise the awareness among the people especially the poor that investment in gold is not productive, and a poor man can never make money by investing in gold. When asked later if RBI is planning to disallow banks from selling gold coins, he said it was not an illegal activity and “hence we cannot do anything”.

Gold imports touched $60.6 billion last fiscal, which also pushed down trade balance, widening the current account deficit which hit a 30-year high of 4.3 percent.

PTI