New Delhi: In its effort to cleanse the banking system in India, the Reserve Bank of India (RBI) has asked the banks to close all such fixed deposit schemes that have a lock-in feature. Taking a strong exception to the features of such schemes RBI has categorically mentioned that all such offers and promotions do not conform to its guidelines. 

Some banks are offering fixed deposit schemes, categorized as 'special' with varying tenures, which have conditions different from regular terms deposits. RBI has objected to such schemes, which offer 6-12 month lock-in period on deposits, no interest on pre-mature withdrawal and interest rates higher than normal deposit rates.

A circular issued by RBI said,“No bank should discriminate in the matter of interest paid on deposits, between one deposit and another, accepted on the same date and for the same maturity, whether such deposits are accepted at the same office or at different offices of the bank.”

There are two ways banks can offer higher rates of interest to its customers. First, if the customer is a resident Indian senior citizen or if the fixed deposit in question has amounts over Rs. 15 lakhs.

Banks offer various types of fixed deposits in India to their customers. The regular fixed deposits are offered with flexibility in period of term deposit from 7 days to 10 years. In addition to it ,some banks offer a fixed deposit scheme, which offers more savings and overdraft facility. Sweep-in fixed deposits are linked to a customer's savings or current account and 5 year tax-saver fixed deposits offer savings in income tax while providing interest on deposited money.