RBI introduces interest pmt norms for frozen NBFC deposits

According to RBI, doubts have been raised on the payment of interest on frozen NBFC deposit which have been seized by government

July 05, 2013 11:18 IST | India Infoline News Service
The Reserve Bank of India (RBI) introduced detailed procedures for payment of interest by NBFCs on public deposits that have been frozen under directions from government authorities.

A request letter may be obtained from the customer on maturity. While obtaining the request letter from the depositor for renewal, NBFCs should also advise him to indicate the term for which the deposit is to be renewed.

In case the depositor does not exercise his option of choosing the term for renewal, NBFCs may renew the same for a term equal to the original term, the RBI said in a notification on Thursday.

No new receipt is required to be issued. However, suitable note may be made regarding renewal in the deposit ledger, it added.

Renewal of deposit may be advised by registered letter / speed post / courier service to the concerned Government department under advice to the depositor. In the advice to the depositor, the rate of interest at which the deposit is renewed should also be mentioned, RBI further said.

If overdue period does not exceed 14 days on the date of receipt of the request letter, renewal may be done from the date of maturity. If it exceeds 14 days, NBFCs may pay interest for the overdue period as per the policy adopted by them, and keep it in a separate interest free sub-account which should be released when the original fixed deposit is released, the central bank said.

According to RBI, doubts have been raised on the payment of interest on such deposit which have been seized by the government authorities.

NBFCs are at times required to freeze the term deposits of customer based on the orders of the enforcement authorities or the deposit receipts are seized by the enforcement authorities.

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