Interest Rate on Deposits Policy

1.             Definitions

(a)           In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them below:

i)             "Bulk Deposit" means single Rupee term deposits of Rupees fifteen lakh and above.

ii)            "Current Account" means a form of non-interest bearing demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and shall also be deemed to include other deposit accounts which are neither Savings Deposit nor Term Deposit.

iii)           "Daily product" means the interest applied on the end of day balance.

iv)           "Demand deposit" means a deposit received by the bank, which is withdrawable on demand;

v)            "Domestic Rupee Deposits" mean rupee deposits maintained in India in the form of current account, savings deposits or term deposit.

vi)           "Family" includes members as mentioned in the banks Service/Staff Regulations.

vii)          "Individual" means a natural person.

viii)         "Member of the banks staff" means a person employed on a regular basis, whether full-time or part-time, and includes a person recruited on probation or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but does not include a person employed  on casual basis or contract basis or who has been deputed to other Institutes on permanent basis or who has voluntarily retired from service before completion of 7 years of employment in the Bank.

ix)           "Notice deposit" means term deposit for specific period but withdraw able on giving at least one complete banking days' notice.

x)            "Retired member of the banks staff" means an employee retiring whether on superannuation or otherwise as provided in the banks Service/Staff Regulations but will not include employees terminated from Bank Services.

xi)           "Savings deposit" means a form of interest bearing demand deposit which is a deposit account whether designated as "Savings Account", "Savings Bank Account", "Savings Deposit Account",  or other account by whatever name called which is subject to the restrictions as to the number of withdrawals as also the amounts of withdrawals permitted by the bank during any specified period;

xii)          "Term deposit" means interest bearing deposit received by the bank for a fixed period and shall also include deposits such as Recurring / Cumulative / Annuity / Reinvestment deposits and Cash Certificates;

(b)           All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Banking Regulation Act or the Reserve Bank of India Act, or any statutory modification or re-enactment thereto or as used in commercial parlance, as the case may be.

2.             Interest Rate framework

Bank shall pay interest on deposits of money (other than current account deposits) accepted by it or renewed by it in their Domestic deposit account on the terms and conditions specified in these directions:

(a)           The power to fix the Rate of Interest on various types of Deposits will be vested in the Managing Director.

(b)           The rates shall be uniform across all branches and for all customers and there shall be no discrimination in the matter of interest paid on the deposits, between one deposit and another of similar amount, accepted on the same date, at any of the branches.

(c)           Interest rates payable on deposits shall be strictly as per the schedule of interest rates disclosed in advance

(d)           The rates shall not be subject to negotiation between the depositors and the bank.

(e)           The interest rates offered shall be reasonable, consistent, transparent and available for supervisory review/scrutiny as and when required.

(f)            All transactions, involving payment of interest on deposits shall be rounded off to the nearest rupee.

(g)           If a term deposit is maturing for payment on a Sunday / holiday / non-business working day, bank shall pay interest at the originally contracted rate on the original principal deposit amount for the Sunday / holiday / non-business working day, intervening between the date of the maturity of the specified term of the deposit and the date of payment of the proceeds of the deposit on the succeeding working day on the maturity value.

3.             Interest rate on Current Account

No interest shall be paid on deposits held in current accounts, provided that balances lying in current account standing in the name of a deceased individual depositor or sole proprietorship concern where the sole proprietor has deceased,  shall attract interest from the date of death of the depositor till the date of repayment to the claimant/s at the rate of interest applicable to savings deposit as on the date of payment.

4.             Interest Rate on Saving Deposits

Interest on domestic  rupee savings deposits shall be calculated on a daily product basis

5.             Interest Rates on domestic Term Deposits

(a)           Interest rates on term deposits shall vary only on account of Tenor of Deposit or size of Deposit or non-availability of premature withdrawal option or non-availability of loans against the Term Deposits. Due permission from Managing Director must be ensured before offering differential rates. Bank shall have the freedom to offer term deposits without premature withdrawal option,provided that all term deposits accepted from individuals (held singly or jointly) and Hindu Undivided Families for amount of Rupees fifteen lakh and below shall have premature-withdrawal-facility.

(b)           Payment of Interest on pre-mature withdrawal:

The interest rates applicable on term deposits withdrawn before the maturity date will be  at the rate applicable to the amount and period for which the deposit remained with the co-operative bank and not at the contracted rate less premature charges. No interest shall be paid, where premature withdrawal of deposits takes place before  completion of 7 days.

6.             Payment of Additional Interest on domestic deposits

(a)           Bank shall, at its discretion, allow additional interest of one per cent per annum, over and above the rate of interest mentioned in the schedule of interest rates   on savings or term deposits of banks staff and their exclusive Associations as well as on deposits of Employees on deputation drawing regular salary from the bank, subject to the following conditions:

i)              The additional interest is payable till the person continues to be eligible for the same and in case of his ceasing to be so eligible, till the maturity of a term deposit account.

ii)             In the case of persons taken on deputation, the benefit will cease to accrue on the expiry of the term of deputation or till the maturity of a term deposit account.

iii)            Bank Employees Federations, in which bank employees are not direct members, shall not be eligible for additional interest.

iv)            The additional interest may be paid on the deposits after obtaining a declaration from the depositor concerned, that the monies deposited or which may  be deposited from time to time into such account belong to the depositor and all Statutory Liabilities arising from such deposits or income earned on such deposits will be of the depositor.

v)             Additional Interest shall be payable to Retired Staff individually or in joint names of his family member wherein all Statutory Liabilities arising from such deposits or income earned on such deposits will be of the depositor Staff.

vi)            Additional Interest will be payable to the spouse of a deceased member or a deceased retired member of the co- operative bank staff.

(b)           Bank shall, formulate term deposit schemes specifically for resident Indian senior citizens, offering higher and fixed rates of interest as compared to normal deposits of any size, provided that this facility is not offered on the term deposit standing in the name of an HUF or the Karta of the Hindu Undivided Family (HUF), even if the Karta is a resident Indian senior citizen.

(c)           Bank shall, at its discretion, give their resident Indian retired staff, who are senior citizens, the benefit of additional interest rates as admissible to senior citizens over and above the additional interest payable to them by virtue of their being retired members of the co-operative bank staff.

(d)           Bank may at its discretion formulate any other term deposit scheme specifically for any class of citizens or for any period of time offering higher rates as compared to normal interest rates.

7.             Interest on overdue domestic deposits

(a)           The rate of interest to be paid on renewal of overdue term deposits for the same time period will be the rates as applicable at that time for the period.

(b)           If a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed    with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.

8.             Periodicity of payment of interest on domestic savings deposits

(a)            Interest on savings deposit shall be credited at quarterly or longer intervals.

(b)           Interest on savings bank accounts, including those frozen by the enforcement authorities, shall be credited on regular basis irrespective of the operational status of the account.

9.             Interest payable on the domestic deposit account of deceased depositor

The rate of interest on matured deposits standing in the name of a deceased individual depositor, or two or more joint depositors, where one of the depositors has died, shall be the contracted rate till date of maturity of such deposits.

10.          Penalty on premature withdrawal of domestic term deposit

(a)           There shall be a penalty for premature withdrawal of term deposits which will be one percent less than the rate as decided by the Bank for the period till which the deposit was held by the Bank.

(b)           The components of penalty shall be clearly brought to the notice of the depositors at the time of acceptance of deposits. If not, no penalty shall be levied.

(c)           In case of splitting of the amount of term deposit at the request from the claimant/s of deceased depositors or Joint account holders, no penalty for premature withdrawal of the term deposit shall be levied if the period and aggregate amount of the deposit do not undergo any change.

11.          Prohibitions

Bank shall not:

(a)           Pay any remuneration or fees or commission or brokerage or incentives on deposits in any form or manner to any individual, firm, company, association, institution or any other person except:

i)              Commission paid to agents employed to collect door-to-door deposits under a special scheme.

ii)             Remuneration paid to Business facilitators or Business Correspondents.

iii)            Incentives granted to staff members as approved by the Reserve Bank of India from time to time.

(b)           Offer prize / lottery / free trips (in India and / or abroad), etc., or any other initiative having element of chance for mobilizing deposits.

(c)           Resort to unethical practices of raising of resources through agents / third parties to  meet the credit needs of the existing / prospective borrowers or to grant loans to the intermediaries based on the consideration of deposit mobilization.

(d)           Issue any advertisement / literature soliciting deposits from public highlighting only the compounded yield on term deposits without indicating the actual rate of simple interest offered for the particular period. Simple rate of interest per annum for the period of deposit should be indicated invariably.

(e)           Accept interest-free deposit other than in current account or pay compensation indirectly.

(f)            Accept deposits from / at the instance of private financiers or unincorporated bodies under any arrangement which provides for either issue of deposit receipt/s favoring client/s of private financiers or giving of an authority by power of attorney, nomination or other-wise, for such clients receiving such deposits on maturity.

(g)            Grant advances against term deposits maintained with other banks.

(h)           Open a savings deposit account in the name of Government departments / bodies depending upon budgetary allocations for performance of their functions / Municipal Corporations or Municipal Committees / Panchayat Samitis / State Housing Boards / Water and Sewerage / Drainage Boards / State Text Book Publishing Corporations / Societies / Metropolitan Development Authority / State / District Level Housing Co- operative Societies, etc. or any political party or any trading/business or professional concern, whether such concern is a proprietary or a partnership firm or a company or an association and entities other than individuals, Karta of HUF and Primary Agricultural Credit Society which is being financed by the co-operative bank , Khadi and Village Industries Boards, Government departments / bodies / agencies in respect of grants/ subsidies released for implementation of various programs / Schemes sponsored by Central Government / State Governments subject to production of an authorization from the respective Central / State Government departments to open savings bank account , Development of Women and Children in Rural Areas (DWCRA) , Self-help Groups (SHGs), registered or unregistered,  Farmers Clubs, Companies licensed by the Central Government under Section 8 of Companies Act, 2013 or Section 25 of Companies Act, 1956 or under the corresponding provision in the Indian Companies Act, 1913 and permitted, not to add to their names the words 'Limited or the words 'Private Limited, Agriculture Produce Market Committees , Societies registered under the Societies Registration Act, 1860 or any other corresponding law in force in a State or a Union Territory.

Explanation

For the purposes of this clause, ‘political party’ means an association or body of individual citizens of India, which is, or is deemed to be registered with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968 as in force for the time being.

(a)           Create any fund to be utilized for charitable purposes in consultation with the depositors.