RBI on Friday (September 16, 2022) notified that its master direction dated March 03, 2016, on interest rates on deposits and May 12, 2016, on ‘Co-operative Banks – Interest Rate on Deposits’ have been modified. Further, the instructions regarding eligibility for the opening of savings account contained in Section 28 (h) and Section 27 (h) of the above-mentioned Master Directions (MDs) dated March 03, 2016, and May 12, have been modified to make them more explicit” the circular of the banking regulator said.
“In terms of Master Direction 2016, the reference rates for arriving at the interest rates on FCNR (B) deposits shall be quoted/displayed by the Foreign Exchange Dealers Association of India (FEDAI). However, with effect from January 31, 2022, the reference rates mentioned above are being quoted/displayed by Financial Benchmarks India Pvt. Ltd. (FBIL). In this regard, the relevant sections of both the Master Directions dated March 03, 2016, and May 12, 2016, have been suitably modified”, said RBI.
The relevant sections of the Master Directions as amended are indicated below
| Existing section | Modified section |
| MD 19(h)-The Overnight Alternative Reference Rate2 for the respective currency / Swap rates quoted/displayed by the Foreign Exchange Dealers Association of India (FEDAI) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits. | MD 19(h)-The Overnight Alternative Reference Rate2 for the respective currency / Swap rates quoted/displayed by Financial Benchmarks India Pvt. Ltd. (FBIL) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits. Changes in amended provision: FEMA replaced by FBIL |
| MD 28(h): Open a savings deposit account in the name of entities other than individuals, Karta of HUF and organizations/agencies listed in Schedule-I. | MD28(h): Open a savings deposit account in the name of Government departments/bodies depending upon budgetary allocations for the performance of their functions / Municipal Corporations or Municipal Committees / Panchayat Samitis / State Housing Boards / Water and Sewerage / Drainage Boards / State Text Book Publishing Corporations / Societies / Metropolitan Development Authority / State / District Level Housing Co-operative Societies, etc. or any political party or any trading/business or professional concern, whether the such concern is proprietary or a partnership firm or a company or an association and entities other than individuals, Karta of HUF, and organizations/agencies listed in Schedule – I. Explanation: For the purposes of this clause, ‘political party’ means an association or body of individual citizens of India, which is, or is deemed to be registered with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968 as in force for the time being. |
| MD item no.6 18(h): 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. | MD item no.6 18(h): Institutions other than those mentioned in Section 28(h) and whose entire income is exempt from payment of Income-tax under the Income Tax Act, 1961. |
Co-operative Banks
| Existing section | Modified section |
| MD 19(h)-The Overnight Alternative Reference Rate2 for the respective currency / Swap rates quoted/displayed by the Foreign Exchange Dealers Association of India (FEDAI) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits. | MD 19(h)-The Overnight Alternative Reference Rate2 for the respective currency / Swap rates quoted/displayed by Financial Benchmarks India Pvt. Ltd. (FBIL) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits. Change in amended provision: FEMA replaced by FBIL |
| 27 (h) Cooperative banks shall not Open a savings deposit account in the name of entities other than individuals, Karta of HUF, and organizations/agencies listed in Schedule – I. | MD27(h): Cooperative banks shall not Open a savings deposit account in the name of Government departments/bodies depending upon budgetary allocations for the performance of their functions / Municipal Corporations or Municipal Committees / Panchayat Samitis / State Housing Boards / Water and Sewerage / Drainage Boards / State Text Book Publishing Corporations / Societies / Metropolitan Development Authority / State / District Level Housing Co-operative Societies, etc. or any political party or any trading/business or professional concern, whether the such concern is proprietary or a partnership firm or a company or an association and entities other than individuals, Karta of HUF, and organizations/agencies listed in Schedule – I. Explanation: For the purposes of this clause, ‘political party’ means an association or body of individual citizens of India, which is, or is deemed to be registered with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968 as in force for the time being. |
| Item no.6 schedule 1 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 | Item no.6 schedule 1: Institutions other than those mentioned in Section 27(h) and whose entire income is exempt from payment of Income-tax under the Income Tax Act, 1961. |
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