Review of Instructions on Interest on overdue domestic deposits

Last updated: 03 July 2021

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The Reserve Bank of India has revised its instructions regarding interest on overdue domestic deposits. Previously, unclaimed funds from matured Term Deposits would earn interest at the savings deposit rate. Now, the interest rate applicable to unclaimed funds will be the lower of either the savings account rate or the original contracted rate of the matured Term Deposit.

RBI/2021-22/66 DoR.SPE.REC.29/13.03.00/2021-2022 July 02, 2021 All Scheduled Commercial Banks (including RRBs) All Small Finance Banks All Local Area Banks All Primary (Urban) Co-operative Banks/ District Central Co-operative Banks/ State Co-operative Banks Dear Sir / Madam, Review of Instructions on Interest on overdue domestic deposits Please refer to Section 9 (b) ofMaster Direction - Reserve Bank of India (Interest Rate on Deposits) Directions, 2016 dated March 3, 2016, an

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FAQ :

The new rule states that if a Term Deposit matures and its proceeds are not paid, the unclaimed amount will attract interest at the rate applicable to a savings account or the contracted rate of interest on the matured Term Deposit, whichever is lower.

This change affects all Scheduled Commercial Banks (including RRBs), Small Finance Banks, Local Area Banks, and all Primary (Urban) Co-operative Banks/ District Central Co-operative Banks/ State Co-operative Banks.

Previously, if a Term Deposit matured and the proceeds were unpaid, the unclaimed amount would attract interest at the rate applicable to savings deposits.

The notification specifically refers to Term Deposits (TDs) that have matured and whose proceeds have remained unpaid.

Notification No : RBI/2021-22/66 DoR.SPE.REC.29/13.03.00/2021-2022
Source : https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12125&Mode=0

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