We present new results on instabilities in rapidly and differentially rotating neutron stars. We model the stars in full general relativity and describe the stellar matter adopting a cold realistic equation of state based on the unified SLy prescription (Douchin and Haensel 2001 Astron. Astrophys. 380 151-67). We provide evidence that rapidly and differentially rotating stars that are below the expected threshold for the dynamical bar-mode instability, βc ≡ T/|W| ~= 0.25, do nevertheless develop a shear instability on a dynamical timescale and for a wide range of values of β. This class of instability, which has so far been found only for small values of β and with very small growth rates, is therefore more generic than previously found and potentially more effective in producing strong sources of gravitational waves. Overall, our findings support the phenomenological predictions made by Watts et al (2005 Astrophys. J. 618 L37) on the nature of the low-T/|W| instability as the manifestation of a shear instability in a region where the latter is possible only for small values of β. Furthermore, our results provide additional insight on shear instabilities and on the necessary conditions for their development.