While all term deposits of individuals (held singly or jointly) of Rs 15 lakh and below should "necessarily" have premature withdrawal facility, RBI said for term deposits of more than Rs 15 lakh, banks can offer deposits without the option of premature withdrawal.

In the sixth bi-monthly Monetary Policy Statement of 2014-15 in February, RBI had decided to introduce early withdrawal facility in a term deposit as a distinguishing feature for offering differential rates of interest.

"Accordingly, banks will have the discretion to offer differential interest rates based on whether the term deposits are with or without-premature-withdrawal-facility," the Reserve Bank said in a notification.

However, banks that offer such term deposits should ensure that at the customer interface point, the customers are given the option to choose between term deposits either with or
without premature withdrawal facility, RBI cited.

Further, RBI added all deposits mobilised by banks should be strictly in conformity with an advance schedule of interest rates payable on such deposits.

RBI also asked the banks to have a Board approved policy with regard to interest rates on deposits including deposits with differential rates of interest and to ensure that the interest rates offered are reasonable, consistent and transparent.

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