DBOD.No. Dir.BC.34/13.03.00/98
April 29, 1998
Vaishakha 9, 1920 (Saka)
Interest
Rates on Deposits
In exercise of the powers conferred by Sections 21 and 35A of the Banking Regulation
Act, 1949 and in modification of its Directive DBOD. No. Dir. BC. 151/C.347-85
dated December 27, 1985, as amended from time to time, the Reserve Bank of India,
being satisfied that it is necessary and expedient in the public interest so
to do, hereby directs that
(ii) paragraph 8 of the aforesaid
Directive shall be substituted by the following:
"8. Premature withdrawal
of term deposit
(i) The bank on request from the
depositor, shall allow withdrawal of a term deposit before completion of the
period of the deposit agreed upon at the time of making the deposit. The bank
shall have the freedom to determine their own penal interest rates for premature
withdrawal of term deposits. This will apply to fresh deposits and renewal of
deposits. The bank shall ensure that the depositors are made aware of the applicable
penal rate along with the deposit rate.
(ii) The effective date of such
changes shall be announced by banks as early as possible"
(iii) the clause (c) of paragraph
17 of the aforesaid Directive shall be substituted by the following :
"(c) discriminate in the matter
of rate of interest paid on deposits, between one deposit and another, accepted
on the same date and for the same maturity whether such deposits are accepted
at the same office or at different offices of the bank, except in respect of
domestic term deposits of Rs. 15 lakh and above on the basis of size of deposits.
The permission to offer varying rates of interest will be subject to the following
conditions :
(a) The permission to offer varying
rates of interest for deposits of the same maturity shall apply to domestic
term deposits of Rs. 15 lakh and above. Banks may therefore offer same rate
of interest or differential rates of interest for domestic deposits of Rs. 15
lakh and above. For domestic deposits below Rs. 15 lakh of the same maturity
the same rate will apply.
Banks should announce the effective
date of change in the policy at the earliest".
(iv) Clause (ii) of paragraph 10
of the aforesaid Directive shall be substituted by the following.
"(ii) Non-resident (External)
Rupee Account
The bank may, at its discretion,
renew an overdue deposit or a portion thereof provided the overdue period from
the date of maturity till the date of renewal (both days inclusive) does not
exceed 14 days and the rate of interest payable on the amount of the deposit
so renewed shall be the appropriate rate of interest for the period of renewal
as prevailing on the date of maturity or on the date when the depositor seeks
renewal whichever is lower. In the case of overdue deposits where the overdue
period exceeds 14 days and if the depositor places the entire amount of overdue
deposit or a portion thereof as a fresh NRE term deposit, banks may fix their
own interest rates for the overdue period on the amount so placed as a fresh
deposit."
(v) Paragraph 11(a) of the aforesaid
directive shall be substituted by the following:
"When an advance is granted
against a term deposit and the deposit stands in the name of
(i) the borrower either singly or
jointly,
(ii) one of the partners of a partnership
firm and the advance is made to the said firm,
(iii) the proprietor of a proprietory
concern and the advance is made to such a concern,
(iv) a ward whose guardian is competent
to borrow on behalf of the ward and where the advance is made to the guardian
of the ward in such capacity, the interest rate chargeable shall be equal to
bank's Prime Lending Rate or less".
2. The other provisions of Directive
DBOD. No. Dir. BC. 151/C.347-85 dated 27 December 1985, as amended from time
to time, shall remain unchanged.
(S. Gurumurthy)
Executive Director
Annexure
Rate of interest on deposits
(Excluding Non-resident Deposits)
Category of Account Percent per annum
(i) Current Nil
(ii) Savings 4.5
(iii) Term deposits
15 days and over Free