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Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions 2016

FEMA - DCBR.Dir.No.1/13.01.000/2015-16 - Dated:- 12-5-2016 - RBI/DCBR/2015-16/23 Master Direction DCBR.Dir.No.1/13.01.000/2015-16 May 12, 2016 Master Direction - In exercise of the powers conferred by Sections 21 and 35 A read with section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified. CHAPTER - I PRELIMINARY 1. Short Title and Commencement ( .....

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lk Deposit" means single Rupee term deposits of Rupees fifteen lakh and above. ii. Co-operative bank means a State co-operative bank, a Central co-operative bank and a Primary co-operative bank. iii. "Current Account" means a form of non-interest bearing demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and shall also be deemed to include other deposit accounts which are neither Saving .....

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gn Currency Non-Resident (Bank) account referred to in Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time to time. ix. "Individual" means a natural person. x. "Member of the banks staff" means a person employed on a regular basis, whether full-time or part-time, and includes a person recruited on probation or employed on a contract of a specified duration or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but doe .....

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lations, 2000, as amended from time to time. xiv. "Retired member of the banks staff" means an employee retiring whether on superannuation or otherwise as provided in the banks Service/Staff Regulations. xv. "RFC account" means a Resident Foreign Currency account referred to in Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2000, as amended from time to time. xvi. "Savings deposit" means a form of interest bearing .....

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erative bank included in second schedule of Reserve Bank of India Act, 1934. xviii. "Term deposit" means interest bearing deposit received by the bank for a fixed period and shall also include deposits such as Recurring / Cumulative / Annuity / Reinvestment deposits and Cash Certificates; (b) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act or the Reserve Bank of India Act, or any statutory modificati .....

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ions: (a) There shall be a comprehensive policy on interest rates on deposits duly approved by the Board of Directors or any committee of the Board to which powers have been delegated. (b) The rates shall be uniform across all branches and for all customers and there shall be no discrimination in the matter of interest paid on the deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices. (c) Interest rates payable on deposits shall be strictly .....

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on a Sunday / holiday / non-business working day i. If a term deposit is maturing for payment on a Sunday / holiday / non-business working day, co-operative banks shall pay interest at the originally contracted rate on the original principal deposit amount for the Sunday / holiday / non-business working day, intervening between the date of the maturity of the specified term of the deposit and the date of payment of the proceeds of the deposit on the succeeding working day. ii. In case of reinves .....

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ate of repayment to the claimant/s at the rate of interest applicable to savings deposit as on the date of payment. 6. Interest Rate on domestic Saving Deposits In addition to the conditions laid down in section 4 of these Directions, interest on domestic rupee savings deposits shall be subject to the following: Interest on domestic rupee savings deposits shall be calculated on a daily product basis as under: (a) A uniform interest rate shall be set on balance up to Rupees one lakh, irrespective .....

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subject to the condition that minimum tenor of the deposit offered shall be seven days. ii) Size of Deposits Differential interest rate shall be offered only on bulk deposits, Provided that differential interest shall not be applicable on deposit schemes framed on the basis of the Bank Term Deposit Scheme, 2006. iii) Non- availability of premature withdrawal option Co-operative banks shall have the freedom to offer term deposits without premature withdrawal option, Provided that all term deposi .....

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shall be paid, where premature withdrawal of deposits takes place before completion of the minimum period specified in section 7(a)(i). 8. Payment of Additional Interest on domestic deposits (a) Co-operative banks shall, at their discretion, allow additional interest of one per cent per annum, over and above the rate of interest mentioned in the schedule of interest rates on savings or term deposits of banks staff and their exclusive Associations as well as on deposits of Managing Director who a .....

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itional interest does not exceed the rate, which could have been allowed if such employees were originally employed by the co-operative bank. iii) In the case of employees taken on deputation from another bank, the co-operative bank from which they are deputed may allow additional interest in respect of the savings or term deposit account opened with it during the period of deputation. iv) In the case of persons taken on deputation for a fixed tenure or on a contract of a fixed tenure, the benef .....

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mber of the co-operative banks staff, either singly or jointly with any member or members of his/her family; or b) the spouse of a deceased member or a deceased retired member of the co-operative banks staff; and c) an Association or a Fund, members of which are members of the co-operative banks staff; (b) Co-operative banks shall, at their discretion, formulate term deposit schemes specifically for resident Indian senior citizens, offering higher and fixed rates of interest as compared to norma .....

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ed members of the co-operative banks staff. 9. Interest on overdue domestic deposits (a) The rate of interest to be paid on renewal of overdue term deposits shall be subject to the stipulation contained in section 4 of these Directions. (b) If a term deposit matures and proceeds are unpaid, the amount left unclaimed with the co-operative bank shall attract rate of interest as applicable to savings deposits. 10. Floating rate domestic term deposits Floating rate domestic term deposits shall be li .....

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ate of interest on matured deposits standing in the name of a deceased individual depositor, or two or more joint depositors, where one of the depositors has died, shall be subject to the conditions laid down in section 4 of these Directions. 13. Penalty on premature withdrawal of domestic term deposit (a) There shall be a comprehensive policy on penalties for premature withdrawal of term deposits approved by the Board of Directors or any Committee of the Board to which powers have been delegate .....

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pee deposits of non-residents under Non-Resident (External) Rupee (NRE) Deposits and Non-Resident Ordinary (NRO) Deposits shall be accepted by only those co-operative banks that are authorised by the Reserve Bank of India in this behalf. 14. Interest rates on Rupee Deposits - Non-Residents Interest on deposits of money accepted or renewed under NRE / NRO deposit scheme shall be on the terms and conditions specified in the ensuing paragraphs: (a) The interest rates shall be subject to the conditi .....

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tenor of NRE term deposits shall be one year and that of NRO term deposits shall be seven days. ii) Size of Deposits Differential interest rate shall be offered only on bulk deposits (d) Interest rates on NRE/ NRO deposits shall not be higher than those offered by the co-operative banks on comparable domestic rupee term deposits. (e) The benefit of additional interest rate on deposits on account of being co-operative banks own staff or senior citizens shall not be available to NRE and NRO deposi .....

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e contracted rate. 15. Prohibition on marking lien Co-operative banks shall not mark any type of lien, direct or indirect, against NRE savings deposits. 16. Penalty on premature withdrawal of NRE deposits There shall be a comprehensive policy on penalties for premature withdrawal of NRE term deposits approved by the Board of Directors or any Committee of the Board to which powers have been delegated, subject to the following: (a) The components of penalty shall be clearly brought to the notice o .....

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on maturity shall be treated as a domestic rupee term deposit and interest shall be paid for the subsequent period at the rate applicable to a domestic term deposit of similar maturity. CHAPTER - V FOREIGN CURRENCY DEPOSITS Foreign Currency deposits under Foreign Currency (Non-Resident) Accounts (Banks) Scheme shall be accepted by scheduled co-operative banks (Authorised Dealer - Category I) only. 18. Foreign Currency (Non-Resident) Accounts (Banks) Scheme Interest on deposits of money accepted .....

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One year and above but less than two years b) Two years and above but less than three years c) Three years and above but less than four years d) Four years and above but less than five years e) Five years only Provided that no scheduled co-operative bank (Authorised Dealer) shall accept or renew FCNR(B) deposits over five years and no recurring deposits shall be accepted under the FCNR(B) Scheme. ii) Size of deposits Scheduled co-operative banks (Authorised Dealers) shall, at their discretion, d .....

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currency / maturity. (e) The interest reset period shall be six months for all floating rate deposits. (f) The LIBOR / SWAP rates as on the last working day of the preceding month shall form the base for fixing ceiling rates for the interest rates offered effective in the following month. (g) The interest rates ceiling on FCNR(B) deposits shall be as under : Period of deposit Ceiling rate 1 year to less than 3 years LIBOR / Swap plus 200 basis points 3 years and above upto and including 5 years .....

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fter for the remaining actual number of days, Provided that the option to receive the interest on maturity with compounding effect shall vest with the depositor. 20. Calculation of interest on renewal of FCNR (B) deposits Interest calculation on renewal of FCNR(B) deposits shall be as under: (a) If the period from the date of maturity till the date of renewal (both days inclusive) does not exceed 14 days, the rate of interest payable on the amount of the deposit so renewed shall be the appropria .....

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ue period i.e. period beyond the original date of maturity. 21. Interest payable on the deposit of a deceased FCNR(B) depositor Scheduled co-operative banks (Authorised Dealers) shall pay interest on the term deposits standing in the name(s) of a deceased FCNR(B) individual depositor or two or more joint depositors where one of the depositors has died, as under:- (a) If paid on the maturity of the deposit, interest shall be paid at the contracted rate; (b) If the deposit is claimed before the ma .....

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for the period for which the deposit remained with the bank beyond the date of maturity. (d) In case of death of the depositor after the date of maturity of the deposit, the interest rate operative on the date of maturity in respect of savings deposits held under Resident Foreign Currency (RFC) Account Scheme shall be paid from the date of maturity till the date of payment. (e) In case the claimants are residents, the maturity proceeds shall be converted into Indian Rupees on the date of maturit .....

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the conditions that: (a) The rate of interest as applicable to FCNR(B) deposits shall continue. (b) Such deposits shall be treated as resident deposits from the date of return of the account holder to India. (c) The FCNR(B) deposits on maturity shall be converted into Resident Rupee Deposit Account or RFC Account (if eligible) at the option of the account holder. (d) The rate of interest on the new deposit (Rupee account or RFC Account) shall be the relevant rate applicable for such deposit acc .....

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rate payable on savings bank deposits held under RFC Account Scheme. 24. Premature withdrawal of deposits (a) Scheduled co-operative banks (Authorised Dealers) shall, on request from the depositor, permit premature withdrawal of deposits under the FCNR(B) Scheme. (b) If the premature withdrawal of FCNR(B) deposits takes place before completion of the minimum stipulated period as mentioned in section 18(b)(i) above, no interest shall be paid. 25. Penalty on premature withdrawal of deposits There .....

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CNR(B) deposits, i. when the depositors return to India for permanent settlement. ii. for conversion of FCNR (B) deposits into NRE deposits or vice-versa. (c) In case of splitting of the amount of term deposit at the request from the claimant/s, no penalty for premature withdrawal of the term deposit shall be levied if the period and aggregate amount of the deposit do not undergo any change. (d) Scheduled co-operative banks (Authorised Dealers) shall, at their discretion, levy penalty to recover .....

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dance with the comprehensive policy on interest rates on deposits duly approved by the Board of Directors or any Committee of the Board to which powers have been delegated. CHAPTER - VI PROHIBITIONS AND EXEMPTIONS 27. Prohibitions Co-operative banks shall not: (a) Pay any remuneration or fees or commission or brokerage or incentives on deposits in any form or manner to any individual, firm, company, association, institution or any other person except: i. commission paid to agents employed to col .....

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ng / prospective borrowers or to grant loans to the intermediaries based on the consideration of deposit mobilisation. (d) Issue any advertisement / literature soliciting deposits from public highlighting only the compounded yield on term deposits without indicating the actual rate of simple interest offered by the co-operative bank for the particular period. Simple rate of interest per annum for the period of deposit should be indicated invariably. (e) Accept interest-free deposit other than in .....

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of entities other than individuals, Karta of HUF and organisations / agencies listed in Schedule - I. (i) Create any fund to be utilized for charitable purposes in consultation with the depositors. 28. Exemptions The provisions in the above paragraphs shall not be applicable to: (a) A deposit received by the co-operative bank: i. from the institutions permitted to participate in the Call / Notice / Term Money Market both as lenders and borrowers. ii. for which it has issued a participation certi .....

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al Government under Section 8 of Companies Act, 2013 or Section 25 of Companies Act, 1956 or under the corresponding provision in the Indian Companies Act, 1913 and permitted, not to add to their names the words 'Limited or the words 'Private Limited (6) Institutions other than those mentioned in section 26(h) and whose entire income is exempt from payment of Income-tax under the Income-Tax Act, 1961 (7) Government departments / bodies / agencies in respect of grants/ subsidies released .....

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OVISIONS 29. With the issue of these directions, the instructions / guidelines contained in the following circulars issued by the Reserve Bank of India stand repealed : A. List of circulars on Interest Rates on Rupee Deposits held in Domestic/NRO/NRE Accounts Sr. No. Circular No. Date Subject 1 RPCD.No.RF.DIR.445/D.1-84/85 18.03.1985 Acceptance of Interest free Deposits 2 UBD.DC.21/V.I-85/86 02.09.1985 Directives on Interest Rates on Deposits 3 UBD.No.DC.101/V.1-88/89 27.03.1989 Interest Rates o .....

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count 9 UBD(SUC)74/DC.V.1(B)/92-93 29.08.1992 Resident Foreign Currency Accounts -Waiver of penalty for Conversion of FCNR/NRE Account 10 RPCD.No.DIR.BC.108/07.38.01/93-94 02.03.1994 Interest Rates on Deposits 11 RPCD.No.BC.84/07.38.01/95-96 09.02.1996 Deposit Mobilisation Schemes - Offering of Incentives 12 UBD.No.DS.CIR.(PCB)43/13.01.00/95-96 15.02.1996 Deposit Mobilisation Schemes - Offering of Incentives 13 UBD.No.DS.PCB.DIR.24/13.01.00/95-96 30.03.1996 Interest Rates on Deposits 14 RPCD.No. .....

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rest Rates on Deposits. 20 UBD.No.DS.PCB.CIR.53/13.01.00/97-98 29.04.1998 Interest Rate on Deposits 21 RPCD.No.RF.BC.39/07.02.08/98-99 04.12.1998 Interest Rates on Deposits 22 RPCD.No.Dir.BC.23A/07.38.01/2000-01 06.10.2000 Interest Rates on Deposits 23 RPCD.No.Dir.BC.29/07.38.01/2000-01 17.10.2000 Interest Rates on Deposits 24 UBD.No.DS.Dir.3/13.01.00/2000-01 03.01.2001 Interest Rates on Deposits 25 RPCD.CO.No.RF.DIR.BC.65/07.38.01/2000-01 05.03.2001 Payment of Interest on the Term Deposit of a .....

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sident (External) Rupee Accounts (NRE Accounts) 31 UBD.BPD.PCB.Cir.49/13.01.00/2002-03 29.04.2003 Deposits under Non-Resident (External) Rupee (NRE) Accounts Scheme 32 RPCD.CO.RF.BC.No.9/07.38.01/2003-04 17.07.2003 Interest Rate on Deposits under Non-Resident (External) Rupee Accounts (NRE Accounts) 33 UBD.BPD(PCB)Cir.No.46/13.01.00/2003-04 17.04.2004 Interest rates on deposits under Non-Resident (External) Rupee A/c (NRE A/cs) 34 RPCD.CO.RF.BC.55/07.38.01/2004-05 01.11.2004 Mid-term Review of A .....

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ings bank account on daily product basis 38 UBD.BPD.PCB.Cir.No.13/13.01.000/2011-12 25.11.2011 Deregulation of Savings Bank Deposit Interest Rate 39 RPCD.CO.RCB.BC.No.47/07.38.01/2011-12 26.12.2011 Deregulation of Savings Bank Deposit Interest Rate - Guidelines 40 RPCD.CO.RCB.Dir.BC. No.49/07.38.01/2011-12 28.12.2011 Deregulation of Interest rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts 41 UBD.BPD.PCB.Cir.No.16/13.01.000/2011-12 28.12.2011 Deregul .....

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2.1998 Conversion of FCNR(B) Accounts of the Returning Indians into RFC Accounts/Resident Rupee Accounts - Payment of Interest 3 RPCD.No.RF.BC.100/07.38.04/97-98 17.03.1998 Conversion of FCNR(B) Accounts of Returning Indians into RFC Accounts/Resident Rupee Accounts - Payment of Interest 4 RPCD.No.DIR.BC.111C/07.38.04/97-98 29.04.1998 Interest Rates on Deposits held under Foreign Currency (Non-Resident) Accounts (Banks) Scheme -FCNR(B) Scheme 5 UBD.No.DS.Dir.(AD).15/13.02.00/97-98 29.04.1998 Int .....

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