Differential rates on deposits beyond RBI norms not acceptable, says Governor

3 min readMumbaiJun 6, 2026 04:21 AM IST

Reserve Bank of India (RBI) Governor Sanjay Malhotra. (PTI Photo/File)

RBI Governor Sanjay Malhotra said Friday that banks are permitted to provide differential interest rates on deposits in certain cases like senior citizens, but the central bank has very clear policies and conditions for such instances. He said banks must be transparent by clearly displaying rates to everyone, and offering undisclosed preferential rates is “certainly not acceptable”.

“We have a very consistent and very clear policy on deposits, as to when they can have differential rates. I think for certain categories of people like senior citizens, or depending on tenure… (in such cases) then you can have differential rates,” Malhotra said at the post monetary policy press conference.

Declining to comment on any specific entity, he said, “But they (banks) have to be transparent at the same time. You have to display them (the rates) to everyone clearly, and any differential rate beyond that, if someone is giving, is certainly not acceptable.”

Malhotra’s remarks were in response to questions on the legality of banks providing loans with differential interest rates after The Indian Express reported last week that HDFC Bank’s internal records showed the bank had made interest payments of Rs 45 crore to the Maharashtra State Road Development Corporation (MSRDC) for 2023-24 and 2024-25.

Internal investigations in the bank, which took place just six days before then chairman Atanu Chakraborty had resigned citing certain practices within the bank not being congruent to his personal values, showed that these payments were meant as “differential interest” to MSRDC, i.e., interest on deposits over and above the specified rate. However, these payments were routed or “camouflaged” through the bank’s marketing department instead of being paid directly to the organisation.

This led to fresh questions on governance at the bank, the largest private-sector lender in the country. In its exchange filing, the bank said, “In this connection, we wish to state that in line with the highest corporate governance standards of the Bank, the Internal Audit function conducts reviews, identifies and presents its observations from time to time. As such, the observations of Internal Audit function are comprehensively addressed by the Bank and that applies to the matter in question.”

While the RBI has maintained its stance of “no material concerns” regarding governance at HDFC Bank, the private lender’s board is expected to meet in the near term to discuss the findings of the bank’s vigilance and audit committees on the matter.