Hold · Rate caps
Prohibition of interest on current accounts
- What it is
- Law or regulation prohibits interest on transaction deposits, including rules against indirect compensation.
- Why it counts
- Savers must supply zero-interest transaction balances, reducing banks' funding costs and allowing inflation to erode those balances.
When it was in force
- United States: 1933 → 2011, historical
- India: 2016 → 2024, historical; the rule may be older than the cited document; its end is not documented
2 examples
United States
1933 → 2011HistoricalMember banks could not pay interest on demand deposits until the Dodd-Frank repeal took effect.
United States today: index 42.9Federal Reserve Act section 19(i), added by Banking Act of 1933 section 11; Regulation QPrimary source
“pay any interest on any deposit which is payable on demand”
India
2016 → 2024HistoricalThe rule may be older than the cited document · Its end is not documented · As cited: 2016-2024 (documented version)
The directions prohibited interest on current accounts, with an exception for balances of deceased individual depositors.
India today: index 60.6Master Direction DBR.Dir.No.84/13.03.00/2015-16, Interest Rate on Deposits Directions, section 5Primary source
“No interest shall be paid on deposits held in current accounts.”
Examples and their dates reviewed .
More rate caps
Further reading
- Financial engineering is no substitute for interest rates: Lessons from Türkiye
- What about Japan?
- ‘Muddling through or tunnelling through?’ UK monetary and fiscal exceptionalism and the Great Inflation
- Reassessing the fall in US public debt after World War II
8 more on rate caps
- Interest Rate Repression: A New Database
- Interest-Rate Liberalization and Capital Misallocations
- Financial Repression is Knocking at the Door, Again
- Indian Financial Sector: Structure, Trends and Turns
- The Liquidation of Government Debt
- Financial repression: Then and now
- Interest Rate Liberalization in China
- A New Database of Financial Reforms