Your Fixed Deposit: RBI tweaks five year old policy on term deposits
Mumbai: The Reserve Bank of India on Friday has tweaked a five year policy concerning term deposits.
The apex bank has directed banks to pay interest on unclaimed amount left by consumers in the term deposit. The interest charged should either be the prevailing interest rate on savings accounts or the contracted rate of interest, whichever is lower.
In a notification, RBI said, “On a review of these (term deposit) 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.”
The previous master circular floated by the RBI said that unpaid term deposits on maturity would attract rate of interest as applicable to savings deposits.
The circular has been amended for co-operative banks too. “If a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the co-operative bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower,” said the note.
A term deposit is colloquially referred to as a fixed deposit. Some banks define a Term Deposit as money kept for a fixed maturity where the depositor is not allowed to withdraw until the end of the period.