General Studies · Premature Withdrawal Rules
According to standard commercial banking practice and RBI regulations, which interest rate is applicable to a Term Deposit that is closed prematurely by the depositor?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The baseline interest rate offered by the bank for the shortest tenure (7 days) minus the penalty.
- 2The current market interest rate applicable for that short period on the exact date of premature closure.
- 3The rate applicable for the period the deposit remained with the bank, as on the date of opening, minus the stipulated penalty.✓
- 4The contracted rate at which the deposit was originally opened, without any penalty.
Correct answer
The rate applicable for the period the deposit remained with the bank, as on the date of opening, minus the stipulated penalty.
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