All Term Deposit in Banks below Rs.15Lakh should have premature Withdrawal facality

BI/2014–15/554 DBR.No.Dir.BC.87/13.03.00/2014–15

April 16, 2015

Please refer to our cir­cu­lars DBOD. No. Dir.BC.36/13.03.00/98 dat­ed April 29, 1998, DBOD. No. Dir.BC.07/13.03.00/2001–02 dat­ed August 11, 2001 and DBOD. No. Dir. BC.74/13.03.00/2012–13 dat­ed Jan­u­ary 24, 2013 in terms of which banks are allowed to offer dif­fer­en­tial rates of inter­est on term deposits on the basis of tenor for deposits less than ₹ 1 crore and on the basis of quan­tum and tenor on term deposits of ₹ 1 crore and above.

2. In this con­nec­tion, atten­tion is invit­ed to para­graph 29 of sixth Bimonth­ly Mon­e­tary Pol­i­cy State­ment- 2014–15 announced on Feb­ru­ary 3, 2015 where­by it was decid­ed to intro­duce the fea­ture of ear­ly with­draw­al facil­i­ty in a term deposit as a dis­tin­guish­ing fea­ture for offer­ing dif­fer­en­tial rates of inter­est. Accord­ing­ly, banks will have the dis­cre­tion to offer dif­fer­en­tial inter­est rates based on whether the term deposits are with or with­out-pre­ma­ture-with­draw­al-facil­i­ty, sub­ject to the fol­low­ing guidelines:

  1. All term deposits of indi­vid­u­als (held singly or joint­ly) of ₹ 15 lakh and below should, nec­es­sar­i­ly, have pre­ma­ture with­draw­al facility.
  2. For all term deposits oth­er than (i) above, banks can offer deposits with­out the option of pre­ma­ture with­draw­al as well. How­ev­er, banks that offer such term deposits should ensure that at the cus­tomer inter­face point the cus­tomers are, in fact, giv­en the option to choose between term deposits either with or with­out pre­ma­ture with­draw­al facility.
  3. Banks should dis­close in advance the sched­ule of inter­est rates payable on deposits i.e. all deposits mobi­lized by banks should be strict­ly in con­for­mi­ty with the pub­lished schedule.
  4. The banks should have a Board approved pol­i­cy with regard to inter­est rates on deposits includ­ing deposits with dif­fer­en­tial rates of inter­est and ensure that the inter­est rates offered are rea­son­able, con­sis­tent, trans­par­ent and avail­able for super­vi­so­ry review/scrutiny as and when required.

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