The Reserve Bank of India (RBI) has issued new rules related to deposit account interest rates for commercial banks across the country. Under this, all banks will give the same rate of interest on the amount up to Rs 1 lakh in the savings account.
Different interest rates can be applied if the amount in the account is more than Rs 1 lakh.
According to the current rules, banks give different rates of interest on the money deposited in the savings account, but now RBI has given instructions to determine the interest by dividing it into two parts. Interest will be charged as per the amount deposited in the account at the end of each day. Banks will have to deposit the interest in the account once in three months. RBI said that the objective of these rules is to protect customer interests, bring transparency and uniformity in the banking system.
No interest on breaking FD before minimum period
RBI has made many important changes in the rules including savings, current bank accounts, fixed deposits (FD) and overdue FD. According to this, no interest will be given if the FD is broken before the minimum period fixed by the bank. RBI has set the minimum standard period of FD as seven days, but banks can set a higher minimum period as per their convenience.
Under the new rules, if the FD is broken after completion of the minimum period, the bank will give you the same interest which is applicable for that period. That means, interest will be paid only for the period the money remains in the bank. The pre-determined higher interest rate will not be applicable. Not only this, it has also been added in the new rules that if the maturity period of an FD falls on a non-business day, then the customer will get interest for that day also and the bank will make the payment on the next working day.
Banks will have to clarify the rules
According to the new rules, now banks will have to clearly tell all the rules related to FD to the customers in advance. For example, what is the minimum tenure of FD? If the FD is broken before then, what will be the penalty? The banks themselves can decide the amount of penalty.
Same rates in all branches
Same FD rates will be applicable in all branches. There will be no negotiation on interest rates between customers and the bank. However, different interest rates may apply for larger deposits i.e. FDs of Rs 3 crore or more.
banks will not be able to do this
RBI has clarified under the new rules that schemes like lottery, prize, foreign trip will not be given on deposit. Will not be able to give illegal commission to any agent in exchange for deposit. Will not make misleading advertisements by showing only compound interest. Some institutions and political parties are not allowed to open savings accounts.
These rules also apply
- Bank employees, retired employees and some of their family members can be given one percent additional interest on fixed deposits and savings accounts.
- If banks want, they can run a separate FD scheme with higher interest rates for senior citizens.
- If you do not withdraw the money after maturity of Time Deposit (TD), you will get the interest rate of savings account or the basic interest rate of TD i.e. lower of the two.
- Normally no interest will be given on current account. But in case of death of the account holder, interest will be given at the savings account rate from the date of death till payment.
- All the old guidelines related to interest rates on deposit accounts have been cancelled. Now unified and simple rules regarding interest rates have been implemented in the banking sector.
NRE and NRO Term Account
RBI has also issued instructions for non-resident Indians. The interest rate on NRI deposits cannot be higher than domestic fixed deposits. The minimum tenure of NRI fixed deposits will be one year. Whereas NRO will be for seven days. NRIs/NROs will not get additional interest on deposits made by senior citizens or bank staff.
NRE account is a type of bank account for non-resident Indians (NRIs) that lets them keep their foreign earnings in India and convert them into Indian rupees. Whereas NRO account is a Non-Resident Ordinary account that allows NRIs to manage income earned in India such as rent, dividends and pensions.