Banking · Deposit Accounts
A customer has a Fixed Deposit (FD) with your bank that matured six months ago. The customer did not provide any instructions for the renewal of the deposit, and the account was not set for auto-renewal. According to the current RBI guidelines on overdue term deposits, how should the interest be calculated for the period the deposit remained overdue?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank must charge a penalty fee and automatically forfeit the accumulated interest of the last quarter.
- 2No interest is payable for the period the deposit remains overdue after the maturity date.
- 3The interest for the overdue period is calculated at the savings bank account interest rate or the contracted rate of interest on the matured TD, whichever is lower.✓
- 4The bank must pay the original contracted rate of interest for the entire overdue period.
Correct answer
The interest for the overdue period is calculated at the savings bank account interest rate or the contracted rate of interest on the matured TD, whichever is lower.
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