RBI’s second quarter monetary policy review on October 25, 2011 had some expected news and few unexpected surprises. While increase in key policy rates by 0.25% was expected and factored in by many experts, RBI threw in a Diwali Gift with deregulation of savings bank interest rates. Accordingly, each bank will offer uniform rate on savings of up-to Rs 1 lakh. Thereafter, Banks may provide differential rates on savings above Rs 1 lakh. RBI has mandated that savings bank account rate be linked with the policy rate at which the central bank lends short-term funds to commercial banks.
So what does it means for the “aam janta” and where do interest rates go from here? Read a detailed analysis on my post in The Forthright titled “De-regulation of savings account interest rate by RBI – How good and How bad?”