BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Customers will get the benefit of higher interest rates
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Banks will have the right to fix their interest rates independently
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Each bank will have their respective interest rates without the need to adhere to fixed interest rate common to all banks
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Banks will decide interest rates for individual customers according to their savings.
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Detailed explanation-1: -As a part of financial sector reforms, the Reserve Bank has deregulated interest rates on deposits, other than savings bank deposits. The interest rate on savings bank deposits has remained unchanged at 3.5 per cent per annum since March 1, 2003.
Detailed explanation-2: -With effect from October 18, 1994, RBI has deregulated the interest rates on advances above Rs. 2 lakh and the rates of interest on such advances are determined by the banks themselves subject to BPLR and Spread guidelines. For credit limits up to Rs. 2 lakh, banks should charge interest not exceeding their BPLR.
Detailed explanation-3: -Banks wishing to enjoy cheaper (savings bank) funds will, therefore, have to work much harder on non-interest factors like service quality, ease of access and other related services on offer to retain customers and ensure their loyalty.
Detailed explanation-4: -Deregulation is the removal of controls and restrictions in a particular area of business or trade. [business] Since deregulation, banks are permitted to set their own interest rates.