The
interest earned on your savings bank deposits is likely to be credited
to your account every month, against the current practice of quarterly
transfers. The Reserve Bank of India (RBI) is likely to ask banks, as
early as Tuesday, the day of the thirdquarter review of its monetary
policy, to increase the frequency of interest payment on savings account
deposits. According to bankers, the regulator feels banks now have a
robust technology platform that can enable an increase in
frequency of
interest credit. Bankers confirm they have the required technology for
this. Following the deregulation of interest rates on savings bank
deposits in October 2011, banks have been free to decide
their respective interest rates. In April 2010, RBI had also mandated
them to compute savings deposit interest rates on a daily basis. They
could now be asked to credit interest regularly, irrespective of whether
or not an account is active. On the policy stance, RBI is expected to
cut its prime lending rate for the first time in nine months, by at
least 25 bps, bankers say.
The central bank had last reduced the
policy rate, or the repo rate, in April 2012, by 50 bps, after a gap of
three years. It maintained astatus quo in the five policy reviews that
followed, as the inflation rate stayed above its comfort zone of 4.5- 5
per cent. The rate of inflation in December stood at its lowest in three
years, down to 7.18 per cent from 7.24 per cent the previous month. The
concerns around economic growth could prompt the central bank to
stimulate demand by cutting rates, analysts say. RBI could also draw
comfort from the government’s recent
initiatives to address the twin deficits — fiscal and current account.
Besides reforms like allowing foreign direct investment in multi- brand
retail and aviation, the government has also increased import duty on
gold by two percentage points to six per cent, to address high current
account deficit.