The freedom to link interest rates with the quantum of funds placed with banks is expected to benefit high net worth customers and also strengthen bank-client relationships.
This will further lead to competition between various short-term instruments like certificates of deposits (CDs) and units of money market mutual funds which traditionally offered higher than fixed deposits.
The monetary policy announced by the RBI has removed the restriction imposed on banks of offering the same rate of interest rate on deposits of same maturity irrespective of the size of the deposits. RBI has said the bank
