- Date : 19/07/2021
- Read: 2 mins
Term deposit investors could lose out on returns if they do not claim maturity proceeds in a timely manner.
The Reserve Bank of India (RBI) in its latest bimonthly monetary policy review meeting made some announcements that will impact millions of fixed deposit investors. Here are the updates.
No change in the repo and reverse repo rates
The RBI has kept the repo rate and the reverse repo rate unchanged at 4% and 3.35%, respectively. This means the low yields on fixed deposit investments would continue to prevail for the time being. Most banks at present are offering between 4.25% and 5.75% interest per annum for non-senior citizen deposits for amounts less than 1 crore, while a few private banks offer up to 7.25%.
Since returns on bank deposits are fully taxable based on the investor’s tax slab, one should bear in mind that the actual returns would be further reduced.
New rules regarding unclaimed deposits
As per the new rules, if a term deposit matures and the proceeds remain unpaid, the unclaimed amount will earn interest as applicable to the savings account or contracted rate of interest on the matured deposit, whichever is lower. The changes are applicable for deposits on all commercial banks, small finance banks, cooperative banks, and local area banks.
Until now, unclaimed deposits could only earn a rate of interest applicable to savings deposits in the event a deposit matured and the proceeds were not paid out. With this change, banks can now choose from two different benchmarks while paying interest on unclaimed deposits.
The directive is aimed to discourage investors from letting their funds idle, considering the quantum of unclaimed bank deposits have been continuously growing. The value of unclaimed deposits grew by over 28% from Rs 14,307 crore in 2018 to Rs 18,380 crore in 2019.