Differential deposit rates permitted but must be transparent, says RBI Governor amid HDFC Bank row

Mumbai: The Reserve Bank of India has said banks are permitted to offer on deposits but only within clearly defined parameters and with full transparency — remarks that come in the backdrop of allegations against of routing differential interest payments to a state government agency through its marketing budget.

“We do allow differential interest rates. We have a very consistent and very clear policy for deposits as to when banks can have differential rates,” said RBI Governor Sanjay Malhotra. “For certain categories of people like senior citizens, depending on tenor, you can have differential rates. But they have to be transparent. You have to display them to everyone clearly. And any differential rate beyond that is certainly not acceptable.”

The Governor’s remarks come after an investigative report claimed HDFC Bank disguised Rs 45 crore in differential interest payments to Maharashtra State Road Development Corporation as marketing expenditure on a road safety awareness campaign.

The report, citing internal bank documents and vigilance probe findings, alleged that HDFC Bank had promised MSRDC a 6.01% return on its savings deposits and that when it could no longer offer this through normal channels, senior management allegedly devised an arrangement to route the differential interest through the marketing department via four local vendors. HDFC Bank strongly denied the allegations, citing robust internal oversight, audit and control processes.