The Reserve Bank of India (RBI) on Friday issued the review of instructions on Interest on overdue domestic deposits.
The RBI has directed all Scheduled Commercial Banks (including RRBs), All Small Finance Banks, All Local Area Banks, and All Primary (Urban) Co-operative Banks/ District Central Co-operative Banks/ State Co-operative Banks to refer to Section 9 (b) of Master Direction – Reserve Bank of India (Interest Rate on Deposits) Directions, 2016 dated March 3, 2016, and the Master Direction -Reserve Bank of India (Co-operative Banks- Interest Rate on Deposits) Directions, 2016 dated May 12, 2016, in terms of which if a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract a rate of interest as applicable to savings deposits.
“On a review of these instructions, it has been decided that if a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower,” the RBI said.
The existing section 9 (b) in respect of interest on overdue domestic deposits says that if a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings deposits.
However, the amended section reads as, “If a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
