The Reserve Bank of India (RBI) has removed restrictions imposed on banks which earlier prevented lenders from levying penalty on customers for foreclosure of some term deposits.
The RBI said, in a notification issued on Monday, banks can formulate their own interest rate policies on foreclosure of term deposits for better asset-liability management.
Earlier, the RBI had said banks cannot impose penalty on customers by reducing interest rates due on the term deposit provided the individual reinvests the money in another scheme which is longer than the remaining period of the original deposit.