What changed
RBI issued a circular on May 17, 2006, confirming that the interest rate on delayed remittances and excess/double reimbursement for government accounts remains at 8%. This rate is unchanged from the previous circular dated November 18, 2005.
What it means for you
Banks handling government accounts must continue to pay 8% interest on any delayed remittances to the government or on amounts received as excess/double reimbursement. This rate is fixed until further notice, so no immediate adjustment is needed in your systems or provisioning.
What you must do
- Ensure your systems apply the 8% interest rate on delayed government remittances and excess/double reimbursement.
- Update internal guidelines to reflect that this rate remains unchanged from the November 2005 circular.
- Monitor any future RBI circulars for potential changes to this rate.
Who it affects
State Bank of India and its associates, All nationalized banks, Jammu & Kashmir Bank Ltd., IDBI Ltd., HDFC Bank Ltd., ICICI Bank Ltd., UTI Bank Ltd.
What is the interest rate on delayed remittances for government accounts?
The rate is 8% per annum, calculated as Bank Rate minus 6% plus 2%, as per the May 17, 2006 circular.
Does this circular change the previous rate?
No, it confirms that the rate remains unchanged from the November 18, 2005 circular.
Which banks are covered by this circular?
State Bank of India and its associates, all nationalized banks, Jammu & Kashmir Bank Ltd., IDBI Ltd., HDFC Bank Ltd., ICICI Bank Ltd., and UTI Bank Ltd.