The Reserve Bank of India (RBI) on Friday said unclaimed maturity proceeds of term deposits (TDs) with banks will attract the rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.
This directive comes in the backdrop of Savings Bank (SB) rates (on deposits above ₹1 lakh) of some of the small finance banks being higher than the TD rates in the less than one-year and above five years maturity buckets.
Hitherto, if a term deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract interest rate as applicable to savings deposits.
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But after reviewing its “instructions on interest on overdue domestic deposits”, the RBI said: “it has been decided that if a 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.”