Correct Option
Prior to October 2011, the interest rates on savings accounts in India were regulated and fixed by the Reserve Bank of India (RBI). However, effective October 2011, the RBI deregulated these rates, granting individual commercial banks the autonomy to determine their own savings account interest rates. This deregulation was aimed at fostering competition and allowing market forces to influence pricing. Consequently, no single external entity, including those listed in the options, is responsible for fixing these rates; rather, individual banks set them based on their policies and market conditions.
Incorrect Options
-
Option (a) Union Ministry of Finance: The Ministry of Finance is primarily responsible for formulating and implementing the government's fiscal policy. It does not directly set interest rates for bank deposits or loans, which falls under the purview of monetary policy and banking regulation.
-
Option (b) Union Finance Commission: The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. Its primary function is to recommend the distribution of tax revenues between the Union and states, and among the states themselves. It has no role in determining bank interest rates.
-
Option (c) Indian Banks' Association (IBA): The IBA is a representative body of banking management in India. It serves as a forum for banks to discuss common issues, represent their interests, and promote best practices. While it facilitates coordination among banks, it is not a regulatory authority and does not have the power to fix interest rates for its member banks.