RBI incentivize small savers with higher rate of interest

 Monetary Policies are made in India keeping the interest of small savers.Fixed deposit schemes in banks were treating big deposits, typically corporate or HNI deposits, differentially. Fixed depositors earn differential rates of interest based on the size of deposit. Deposits above Rs 1 crore earn a higher rate of interest. Additionally deposits up to Rs 1 crore can be withdrawn prematurely, resulting in asset-liability (ALM) mismatch. To correct this anomaly, the RBI has allowed banks to offer deposit schemes up to Rs 1 crore which cannot be broken prematurely. There are so-called non-callable deposits which would attract different (higher) rates of interest. Since the money would remain with the bank for a fixed and longer tenure it would avoid AM mismatches. This opens the prospect of retail depositors, who opt for such deposits, to earn a slightly better rate of interest than on a callable deposit. We believe schemes like this will go a long way in not just incentivizing small savers but also help in financial inclusion.