Savings Account Interest Rate Stipulation

Understanding who determines the interest rate on savings bank accounts is important for anyone holding such an account. Historically, the Reserve Bank of India (RBI) played a direct role in setting these rates.

However, there was a significant change in policy regarding savings account interest rates.

• Before October 25, 2011, the RBI mandated a fixed interest rate for savings accounts across all banks in India.
• On October 25, 2011, the RBI deregulated the interest rate on savings bank deposits.

This deregulation meant that individual banks were given the freedom to decide the interest rates they would offer on savings accounts.

Therefore, the interest rate for a savings bank account is no longer centrally stipulated by the RBI or the government or an association. Instead, each individual bank determines its own interest rate.

Let's look at the given options:

• Concerned bank: This option aligns with the current policy where each bank sets its own savings account interest rate after deregulation by RBI.
• RBI: While RBI used to stipulate the rate, it deregulated it in 2011. So, RBI does not currently stipulate the rate directly.
• Government of India: The government does not typically stipulate specific interest rates for bank deposits like savings accounts. This is usually under the purview of the central bank (RBI) or the banks themselves.
• Indian bank association: An association represents banks but does not have the authority to stipulate interest rates for all member banks.

Based on the deregulation, the rate of interest in a savings bank account is stipulated by the concerned bank.