New norm to calculate interest on overdue term deposits
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The Reserve Bank of India (RBI) has amended the norms as per which unclaimed maturity proceeds of term deposits (TDs) with banks will attract the rate of interest as applicable to savings accounts or the contracted rate of interest on the matured TD, whichever is lower.
As per the current rules, 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.
"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 in a circular.
There will be a similar norm in terms of term deposits in co-operative banks.
The central bank has sent out a circular 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, in this regard.
Term deposit refers to an interest-bearing deposit received by the bank for a fixed period and shall also include deposits such as recurring, cumulative, annuity, reinvestment deposits, and cash certificates.
