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Banks can now offer differential rates to fixed deposit holders

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RBIThe Reserve Bank of India (RBI) has allowed banks to offer higher rates of interest to those who do not agree to prematurely withdraw their high-value fixed deposits.

Banks can offer such rates to depositors who can keep a minimum of Rs 15 lakh for the tenure of the deposit. At present, depositors are entitled to withdraw their deposits prematurely without giving any reason to the banker.

This move will help build a base of medium-to-long-term assured deposits, enabling banks to better handle asset-liability issues.

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