New criterion for calculation of interest on overdue fixed deposits
The Reserve Bank of India (RBI) has amended the rules, according to which the unclaimed maturity amount of fixed deposits (TD) with banks will attract interest at the rate of interest applicable to savings accounts or contracted rate. Interest on mature TD, whichever is less. As per the extant rules, if a fixed deposit matures and the proceeds are not paid, the interest rate applicable to savings deposit will be applicable on the unclaimed amount with the bank.
RBI said in a circular that on a review of these instructions, it has been decided that if any Fixed Deposit (TD) matures and the proceeds are not paid, the savings account with the bank on the unclaimed amount The interest rate applicable to or contracted interest rate maturity TD, whichever is lower. Similar norms would be applicable in the case of fixed deposits in co-operative banks.
The central bank has sent a circular in this regard to all scheduled commercial banks, small finance banks, local area banks, primary (urban) co-operative banks, district central co-operative banks and state co-operative banks.
Fixed deposit refers to interest-bearing deposits received by a bank for a fixed period and will also include deposits such as recurring, cumulative, annuity, reinvestment deposits and cash certificates.
