Frequently Asked Questions

  • Q: Can Banks accept interest free deposits?
  • Banks cannot accept interest free deposits other than in current account.
  • Q: Can Banks pay interest on savings bank accounts?
  • Banks can pay interest on savings bank accounts at quarterly or longer rests.
  • Q: Can Banks pay interest on term deposits monthly?
  • Interest on term deposits is payable at monthly or longer rests.
  • Q: Can Banks pay differential rate of interest on deposits aggregating Rs.15 Lacs and above?
  • Differential rates of interest can be paid on single deposit of Rs.15 lacs and above and not on the aggregate of individual deposits where such total exceeds Rs.15 lacs
  • Q: Can Banks prematurely repay the term deposit on their own?
  • The term deposit is a contract between the bank and the customer for a definite term and it cannot be paid prematurely at banks option. Term deposit can be paid prematurely at the request of the customer.
  • Q: How and when are banks required to pay interest on the deposits maturing on holiday/Sunday/Non-business working day?
  • Banks should pay interest at the originally contracted rate on the deposit amount for the holiday/Sunday/Non-business working day intervening between the date of expiry of the specified term of the deposit and the date of payment of the proceeds of the deposits on the succeeding working day.
  • Q: Can Banks refuse premature withdrawal of term deposits?
  • Banks cannot refuse premature withdrawal of term deposits.
  • Q: Can banks levy penalty for premature withdrawal?
  • Banks have freedom to determine their own penal rates of interest for premature withdrawal of term deposits.
  • Q: Can banks pay additional interest admissible to bank staff on the deposit placed in the name of minor / children of the deceased member of staff?
  • No. Children (including minor) are not eligible for additional interest admissible to banks staff member/retired staff member.
  • Q: Can additional interest admissible to bank staff can be paid on the compensation awarded by the court to minor child and deposited in the joint name of minor child and parent?
  • No. As the money belongs to the minor child and not the banks staff, additional interest cannot be paid.
  • Q: Can Banks open saving accounts in the name of Government Departments / Government scheme?
  • Savings bank account cannot be opened in the name of Government Department/ Government Scheme, excepting in respect of deposits of some Government organizations / agencies for e.g. APMC’S, DPAP, Khadi and village Industries Boards.
  • Q: At what rate interest payable on deposit standing in the name of deceased depositor?
  • In case of a term deposit standing in the name of a deceased depositor, interest will be paid in the following manner; If the payment of deposit is claimed before the maturity, the interest is payable at the rate prevalent on the date on which the deposit was placed with the bank and as applicable to the period for which the deposit remained with the bank, without charging any penalty. If the payment of deposit is claimed after the date of maturity, the interest is payable at the contracted rate up to the date of maturity. From the date of maturity till the date of payment of the deposit, the bank shall pay interest at saving rate of interest prevailing on the date of maturity as applicable to the period for which the deposit remained with the bank from the date of maturity of the deposit till its payment.
  • Q: What is the meaning of the word PRL in Lending rate?
  • Banks are free to fix Prime Lending Rate (PLR) for credit limits over Rs.2 lac with the approval of their respective Boards, which should be the minimum rate charged by them for such credit limits. PLR is to be declared and has to be uniformly made applicable at all branches.
  • Q: Can Bank have multiple PLRs?
  • Yes. The banks may announce different PLRs for credit limits over Rs. 2 lac for different maturities provided the transparency and uniformity of treatment originally envisaged continues to be maintained. Banks may announce a separate Prime Term Lending Rate (PTLR) for term loans of three years and above. Banks may also prescribe separate PLRs and spreads over PLRs for loan component and cash credit component.
  • Q: Whether the revised PLR/s will be applicable to existing advances?
  • Yes. The banks are required to invariably incorporate following proviso in the loan agreements in the case of all advances, including term loans, enabling banks to charge the applicable interest rate in conformity with the directives issued by RBI or as may be decided by the Bank, except in case of Fixed Rate Loans. "Provided that the interest payable by the borrower shall be subject to the changes in interest rates made by the Bank or the Reserve Bank from time to time."
  • Q: What should be the penal rate of interest?
  • In the event of default, the banks may charge penal interest in the borrower accounts. The penal interest is independent of the regular rate of interest.