RBI/2007-2008/187
UBD
(PCB) BPD Cir No: 21 /13.01.000/2007-08 November
15, 2007 The
Chief Executive Officers of
All
Primary (Urban) Co-operative Banks Dear
Sir/Madam, Deposit
schemes with lock-in period It
has been brought to notice of the Reserve Bank that some banks are offering special
term deposit products to customers, in addition to regular term deposits, ranging
from 300 days to five years, with the following features: i.
Lock-in periods ranging from 6 to 12 months;
ii.
Premature withdrawal is not permitted during the lock-in period. In case premature
withdrawal is allowed during the lock-in period, no interest is paid;
iii.
Rates of interest offered on these deposits are not in tune with the rates of
interest on normal deposits and
iv.
Part pre-payment is allowed by some banks subject to certain conditions. 2.
In this connection, a reference is invited to paragraph 17.1 (i) of Master
Circular UBD No. BPD.MC.No.1/13.01.000/2007-08 dated July 2, 2007 on 'Interest
Rates on Rupee Deposits -UCBs' in terms of which, banks were advised not to discriminate
in the matter 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 fixed
deposit schemes specifically for resident Indian senior citizens offering higher
and fixed rates of interest as compared to normal deposits of any size, and single
term deposits of Rs.15 lakh and above on which varying rates of interest may be
permitted on the basis of size of the deposits. 3.
Before launching new domestic deposit mobilization schemes with the approval of
their respective Boards, they should ensure that the provisions of RBI directives
on interest rates on deposits, premature withdrawal of term deposits, sanction
of loans/advances against term deposits, etc., issued from time to time, are strictly
adhered to. Any violation in this regard will be viewed seriously and may attract
penalty under the Banking Regulation Act, 1949 (AACS). 4.
It is clarified that the special schemes, with lock-in periods and other features
referred to at paragraph 1 above, which have been floated by some banks, are not
in conformity with our instructions. Banks that have floated such deposit schemes
are, therefore, advised to discontinue the schemes with immediate effect and report
compliance to Regional Office concerned of Reserve Bank. Yours
faithfully (A.
K. Khound)
Chief
General Manager |