What changed
RBI introduced a compensation structure for investors in Relief/Savings Bonds who suffer financial loss due to late receipt or delayed credit of interest warrants or maturity value. The compensation is payable at the current Savings Bank rate. For interest warrants, the period of delay is calculated from the day after the coupon date (e.g., 2 January/February/July/August) to the actual date of receipt or credit, excluding that date. For maturity proceeds, delay is calculated from the date of maturity or five clear working days after submission of discharged securities, as applicable.
What it means for you
Banks must now proactively ensure timely dispatch of interest warrants (one month before due date) and prompt credit of maturity proceeds (within five working days of receiving discharged securities). Failure to do so will result in compensation costs at the Savings Bank rate, increasing operational pressure to streamline bond servicing processes. This aligns with RBI's focus on better customer service and penalizes delays.
What you must do
- Review and tighten internal timelines for dispatching interest warrants at least one month before the coupon date.
- Ensure maturity proceeds are credited or payment orders issued within five clear working days of receiving discharged securities.
- Set up a mechanism to track delays and calculate compensation at the current Savings Bank rate from the day after the coupon date.
- Update systems to handle compensation for both postal and ECS/account credit modes for all bond holding types.
- Communicate the new compensation policy to relevant operations and customer service teams.
Who it affects
Agency banks handling Relief/Savings Bonds (SBI, associate banks, nationalised banks, UTI Bank, ICICI Bank, HDFC Bank, IDBI Bank, SHCIL), Bond operations and customer service departments, Investors in Relief/Savings Bonds (non-cumulative and cumulative)
What rate is used for compensating delayed bond payments?
Compensation is paid at the current Savings Bank rate, as decided by RBI, for the period of delay.
How is the delay period calculated for interest warrants?
For interest warrants, delay is counted from the day after the coupon date (e.g., 2 January) to the actual date of receipt or credit, excluding that date. This applies to both postal and ECS/account credit modes.
Does this apply to cumulative bonds?
Yes, but for cumulative bonds, interest is paid along with principal at maturity, so the compensation applies to delayed maturity proceeds, not separate interest warrants.