**Policy Summary: RBI/2021-22/66 DoR.SPE.REC.2913/03.002/2021-2022**
**Subject:** Review of Instructions on Interest on Overdue Domestic Deposits
**Issuing Authority:** Reserve Bank of India (RBI)
**Date of Issuance:** July 02, 2021
**Addressees:** All Scheduled Commercial Banks (including RRBs), All Small Finance Banks, All Local Area Banks, All Primary Urban Cooperative Banks, District Central Cooperative Banks, State Cooperative Banks.
**Purpose:** To revise the interest rate applicable to unclaimed proceeds of matured Term Deposits (TDs).
**Key Change:** Previously, unclaimed proceeds of matured TDs attracted the interest rate applicable to savings deposits. This policy modifies that provision. Now, if a TD matures and the proceeds remain unclaimed, the amount will attract the rate of interest applicable to either a savings account or the contracted rate of interest on the matured TD, **whichever is lower.**
**Amendment Details:** The relevant sections of the following Master Directions are amended:
* Master Direction Reserve Bank of India - Interest Rate on Deposits Directions, 2016 dated March 03, 2016, updated as on February 22, 2019.
* Master Direction Reserve Bank of India - Cooperative Banks Interest Rate on Deposits Directions, 2016 dated May 12, 2016.
**Impact:** This change affects the interest earned on matured TDs that remain unclaimed across various banking institutions, ensuring that the interest rate applied is the lower of the savings account rate or the original contracted TD rate.
**Contact:** Thomas Mathew, Chief General Manager.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, which issued the directives under review.
Master Direction Reserve Bank of India Interest Rate on Deposits Directions, 2016: A set of instructions issued by the RBI regarding interest rates on deposits.
All Scheduled Commercial Banks including RRBs: Refers to all scheduled commercial banks in India, including Regional Rural Banks, to whom the notification is addressed.
All Small Finance Banks: Refers to all Small Finance Banks in India, to whom the notification is addressed.
All Local Area Banks: Refers to all Local Area Banks in India, to whom the notification is addressed.
All Primary Urban Cooperative Banks: Refers to all Primary Urban Cooperative Banks in India, to whom the notification is addressed.
District Central Cooperative Banks: Refers to all District Central Cooperative Banks in India, to whom the notification is addressed.
State Cooperative Banks: Refers to all State Cooperative Banks in India, to whom the notification is addressed.
RBI/2021-22/66
DoR.SPE.REC.29/13.03.00/2021-2022 July 02, 2021
All Scheduled Commercial Banks (including RRBs)
All Small Finance Banks
All Local Area Banks
All Primary (Urban) Co-operative Banks/ District Central Co-operative Banks/
State Co-operative Banks
Dear Sir / Madam,
Review of Instructions on Interest on overdue domestic deposits
Please refer to Section 9 (b) of Master Direction - Reserve Bank of India (Interest Rate
on Deposits) Directions, 2016 dated March 3, 2016, and the Master Direction -Reserve
Bank of India (Co-operative Banks- Interest Rate on Deposits) Directions, 2016 dated
May 12, 2016 in terms of which if a Term Deposit matures and proceeds are unpaid,
the amount left unclaimed with the bank shall attract rate of interest as applicable to
savings deposits.
2. On a review of these 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 as applicable to savings account or the contracted rate of interest
on the matured TD, whichever is lower.
3. The relevant section of Master Directions are amended accordingly as indicated in
the Annex.
Yours faithfully,
(Thomas Mathew)
Chief General ManagerANNEX
Amendments to Master Directions
Sl. No. Existing Section Amended Section
A. Master Direction – Reserve Bank of India (Interest Rate on Deposits)
Directions, 2016 dated March 03, 2016 (Updated as on February 22, 2019)
Section 9 Interest on overdue domestic deposits Interest on overdue domestic deposits
(b)
If a Term Deposit matures and If a Term Deposit (TD) matures and
proceeds are unpaid, the amount left proceeds are unpaid, the amount left
unclaimed with the bank shall attract unclaimed with the bank shall attract
rate of interest as applicable to savings rate of interest as applicable to
deposits. savings account or the contracted rate
of interest on the matured TD,
whichever is lower.
B. Master Direction – Reserve Bank of India (Co-operative Banks- Interest Rate
on Deposits) Directions, 2016 dated May 12, 2016
Section 9 Interest on overdue domestic deposits Interest on overdue domestic deposits
(b)
If a term deposit matures and proceeds If a Term Deposit (TD) matures and
are unpaid, the amount left unclaimed proceeds are unpaid, the amount left
with the co-operative bank shall attract unclaimed with the co-operative bank
rate of interest as applicable to savings shall attract rate of interest as
deposits applicable to savings account or the
contracted rate of interest on the
matured TD, whichever is lower.