The Reserve Bank of India (RBI) has issued updated directions (2025) governing how commercial banks must set and pay interest on domestic deposits, NRE/NRO deposits, and FCNR(B) deposits. The circular emphasises transparency, uniformity, and customer protection.
1. Uniform, Transparent Interest-Rate Framework
– Board-approved interest-rate policy.
– Uniform, non-discriminatory rates across branches.
– No negotiated rates; only published schedule.
– Bulk deposit rate card must be maintained.
– Rounded-off interest: nearest rupee (INR), two decimals (FCNRB).
2. Deposits Maturing on Non-Business Days
– Interest at contracted rate for all intervening non-business days.
– Applies to commercial and co-operative banks.
– Reinvestment/recurring deposits: interest on maturity value.
3. Transfer of Branches Between Banks
– Deposit terms continue unchanged.
– Same interest rate payable till maturity.
Domestic Rupee Deposits
4. Current Accounts
– No interest.
– Exception: deceased accounts earn savings rate until settlement.
5. Savings Accounts
– Daily product method.
– Uniform rate up to ₹1 lakh; differential above ₹1 lakh.
– Interest credit: quarterly/shorter (commercial), quarterly/longer (co-op).
6. Domestic Term Deposits
– Rates vary by tenor, size (bulk), and premature withdrawal option.
– Minimum tenor: 7 days.
– Premature withdrawal: rate applicable to actual period; no interest if <7 days.
– Additional interest: up to 1% for staff/retirees and associations.
– Senior citizen schemes permitted.
– Overdue deposits earn lower of savings or contracted rate.
– Floating rate deposits must use transparent benchmarks.
7. Composite Cash Credit of Farmers
– Banks may pay interest on minimum balance (10th to month-end).
Non-Resident Rupee Deposits (NRE/NRO)
8. General
– Only authorised banks may accept NRE/NRO deposits.
9. Interest Structure
– Minimum tenor: NRE (1 year), NRO (7 days).
– Rates must not exceed domestic deposit rates.
– No senior citizen/staff additional interest.
10. Interest Credit Frequency
– Quarterly/shorter (commercial).
– Quarterly/longer (co-op).
11. Conversion to RFC
– If run < 1 year: interest ≤ RFC savings rate.
– Otherwise: contracted rate.
12. Premature Withdrawal
– No penalty for NRE→RFC conversion.
– Penalty applicable for NRE↔FCNR(B).
– No penalty in branch-transfer cases.
13. Deceased NRE Depositors
– Becomes domestic TD upon maturity for resident claimants.
Foreign Currency Deposits – FCNR(B)
14. General
– Only authorised banks under FEMA may accept FCNR(B).
15. Interest Structure
– Tenors: 1–<2, 2–<3, 3–<4, 4–<5, 5 years only.
– No recurring FCNR(B) deposits.
16. Ceiling Rates
– 1–<3 years: ARR/Swap + 250 bps
– 3–5 years: ARR/Swap + 350 bps
– Based on FBIL benchmarks.
Interest on the deposits accepted under the scheme shall be calculated on the basis of 360 days to a year
17. Floating Rate Deposits
– Reset every 6 months.
– Benchmark: ARR/swap of previous month-end.
