Interest Rates on and Premature Withdrawal of Rupee Term Deposits

Banks are permitting to offer, at their discretion, differential rates of interest on single term deposits of same maturity of `15 lakh and above, subject to certain conditions. It has been decided that henceforth, the permission to offer differential rates of interest for the deposits of the same maturity will be applicable to bulk deposits of ` 1 crore and above. For deposits below ` 1 crore, the same rate will apply for deposits of the same maturity. Rupee term deposits will include domestic term deposits as well as term deposits under NRO and NRE accounts. Banks should disclose in advance the schedule of interest rates payable on deposits including deposits on which differential interest will be paid. Interest paid by banks should be as per the schedule and not be subject to negotiation between the depositor and the bank.

 However, the bank, at its discretion, may disallow premature withdrawal of large deposits held by entities other than individuals and Hindu Undivided Families (HUFs). These instructions have been reviewed and it has now been decided that banks will have the discretion to disallow premature withdrawal of a term deposit in respect of bulk deposits of ` 1 crore and above of all depositors, including deposits of individuals and HUFs. Bank should, however, notify such depositors of its policy of disallowing premature withdrawal in advance, i.e., at the time of accepting such deposits. A bank on request from a depositor shall allow withdrawal of a Rupee term deposits of less than ` 1 crore, before completion of the period of the deposit agreed upon at the time of making the deposit. Bank will have the freedom to determine its own penal interest rates for premature withdrawal of term deposits. Bank should ensure that the depositors are made aware of the applicable penal rates along with the deposit rates.

To view the full notification please follow the link

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s