The RBI has made several important changes to the rules for savings and current bank accounts, as well as fixed deposits (FDs) and overdue FDs. According to this, no interest will be paid if the FD is broken before the minimum period specified by the bank.
Add informalnewz.com as a Preferred Source
The Reserve Bank of India (RBI) has issued new rules for commercial banks nationwide regarding interest rates on deposit accounts. Under these rules, all banks will offer a uniform rate of interest on savings account balances up to ₹1 lakh. For accounts with balances exceeding ₹1 lakh, different interest rates may apply.
Under current regulations, banks pay varying interest rates on savings account deposits. However, the RBI has now mandated a two-part split. Interest will be calculated based on the balance in the account at the end of each day. Banks must credit interest to accounts once every three months. The RBI stated that these regulations are intended to protect customer interests, promote transparency, and bring uniformity to the banking system.
No Interest on Breaking FDs Before the Minimum Period
The RBI has made several significant changes to regulations related to savings and current bank accounts, including fixed deposits (FDs), and overdue FDs. According to these regulations, no interest will be paid if an FD is broken before the minimum period set by the bank. The RBI has set a minimum standard period of seven days, but banks can set a higher minimum period as per their convenience.
Under the new regulations, if an FD is broken after the minimum period is reached, the bank will pay the interest applicable for that period. That is, interest will be paid only for the period the money remained in the bank. The pre-determined higher interest rate will no longer apply. Furthermore, the new rules also stipulate that if an FD’s maturity period falls on a non-business day, the customer will receive interest for that day as well, and the bank will make the payment on the next working day.
Banks must clarify the rules
According to the new rules, banks will now be required to clearly communicate all FD-related rules to customers in advance. For example, the minimum term limit for an FD and the penalty for breaking the FD before that date. Banks can decide the penalty amount themselves.
Uniform rates across all branches
Fixed deposit rates will be the same across all branches. There will be no negotiation between the customer and the bank on the interest rate. However, different interest rates may apply to large deposits, i.e., FDs of ₹3 crore or more.
Banks will not be able to do this
Under the new rules, the RBI has clarified that they will not be able to offer schemes such as lotteries, prizes, or foreign travel in exchange for deposits. They will not be able to pay illegal commissions to agents in exchange for deposits. They will also not be allowed to make misleading advertisements by simply showing compound interest. Certain organizations and political parties will not be allowed to open savings accounts.
These rules also apply.
Bank employees, retired employees, and some of their family members may be given an additional one percent interest on fixed deposits and savings accounts.
Banks may offer separate, higher-interest FD schemes for senior citizens.
If a time deposit (TD) is not withdrawn after maturity, the interest will be paid at the savings account interest rate or the TD’s original interest rate, or the lower of the two.
No interest will be paid on a current account. However, in the event of the account holder’s death, interest will be paid at the savings account rate from the date of death until the date of disbursement.
All previous guidelines regarding interest rates on deposit accounts have been repealed. Unified and simplified rules regarding interest rates have now been implemented across the banking sector.
NRE and NRO Term Deposits
The RBI has also issued guidelines for non-resident Indians. The interest rate on NRI deposits cannot exceed that on domestic term deposits. The minimum tenure for NRI term deposits will be one year, while for NRO deposits, it will be seven days. NRI/NRO deposits will not get additional interest on deposits to senior citizens or bank staff.
An NRE account is a type of bank account for non-resident Indians (NRIs) that allows them to keep their foreign income in India and convert it into Indian rupees. An NRO account is a non-resident ordinary account that allows NRIs to manage income earned in India, such as rent, dividends, and pensions.
Read More: Personal Loan: You should not take a personal loan for these 8 purposes, know the reason
