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The Reserve Bank of India has notified that term deposits of Rs 15 lakh and below must have premature withdrawal facility with a uniform interest rate.
The RBI notification follows an announcement in the sixth bi-monthly monetary policy review in February in which banks were told that they could offer differential interest rates on term deposits based on early withdrawal facility.
Meanwhile, for the fixed deposits above Rs15 lakh, banks can offer different rates based on whether the customer wants to withdraw his/her deposit prematurely but the option should be clearly mentioned to the customer, RBI said.
RBI further added that banks should have a board approved policy with regard to interest rates on deposits including deposits with differential rates of interest.