Date: February 24, 2015
CDs Basel norms
Commercial Banks will be allowed to take Non-callable Deposits:RBI
Recently, the Reserve Bank of India announced the banks will be allowed to take non-callable deposits to deal with their Asset-Liability Management. By allowing this, banks will be able to get long term funds which they are sure will not be withdrawn. So, banks can also maintain balance of their liabilities with assets.
Non-callable deposits are basically fixed deposits which cannot be broken prematurely. It stands for if any depositor agrees to deposit a sum of money in a non-callable deposit, he/she will not be able to withdraw it till the end of the contracted tenure. Depositors could earn higher returns as there is security of tenure of deposits for banks.
Callable Deposits on the other hand is a time deposit with bank/financial institution. In callable deposits a pre mature withdrawl is allowed. There is low interest rate on them in comparison with non callable deposits.
Suggested further readings-
BASEL I,II and III: and Liquidity ratios (all these will be provided in economy segment of General studies soon)