RBI keeps interest on delayed govt remittances at 8%
Current · Source: Reserve Bank of India · RBI/2006-2007/410 · issued 23 May 2007 · ~1 min read
Quick answerRBI has held the interest rate on delayed remittances and excess/double reimbursement for government accounts at 8% (Bank Rate minus 6% plus 2%), effective from May 23, 2007, until further notice.
The rule, in the simplest words
Banks must pay 8% interest if they are late sending money to the government or if they pay the government too much by mistake.
This 8% rate is fixed and does not change with the market; it is calculated as Bank Rate (a special number set by RBI) minus 6% plus 2%.
The rule applies to all banks that handle government accounts, like SBI, nationalised banks, and others listed.
Banks should update their computer systems to automatically apply this 8% interest on late or extra payments to the government.
How it plays out — a real example
A forex & trade-finance officer in Indore processes a government tax remittance for a local branch. The payment is delayed by 10 days due to a system glitch. Following the RBI rule, the officer calculates 8% interest on the delayed amount and ensures the extra interest is paid to the government account, avoiding any penalty for the bank.
What changed
RBI confirmed that the interest rate on delayed remittances and double/excess reimbursement for government accounts remains unchanged at 8%. This rate is calculated as Bank Rate minus 6% plus 2%. The circular supersedes the previous instruction from November 7, 2006, but keeps the same rate.
What it means for you
Banks handling government accounts must continue to pay 8% interest on any delayed remittances or excess/double reimbursements. This rate is fixed and not linked to market fluctuations, providing clarity for compliance. Lenders should ensure their systems accurately calculate and remit interest to avoid penalties.
What you must do
Update internal systems to apply 8% interest on delayed remittances and excess/double reimbursements for government accounts.
Review past transactions since November 2006 to ensure correct interest calculation and payment.
Train staff handling government accounts on the unchanged rate and calculation formula (Bank Rate - 6% + 2%).
Monitor RBI circulars for any future changes to this rate.
Who it affects
State Bank of India and its associates, All nationalised banks, Jammu & Kashmir Bank Ltd., IDBI Ltd., HDFC Bank Ltd., ICICI Bank Ltd., UTI Bank Ltd., Any bank maintaining government accounts
❓ Common questions
Regulatory timeline
Stated effective dateeffective from May 23, 2007
Decoded by BankPulse2026-06-19 16:40 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the current interest rate on delayed remittances for government accounts?
The rate remains 8% per annum, calculated as Bank Rate minus 6% plus 2%, as per RBI circular dated May 23, 2007.
Does this circular apply to all banks?
It applies to State Bank of India and its associates, all nationalised banks, Jammu & Kashmir Bank, IDBI, HDFC Bank, ICICI Bank, and UTI Bank, effectively covering all banks handling government accounts.
When did this rate become effective?
The rate was effective from May 23, 2007, and remains unchanged until further instructions from RBI.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/410
DGBA.GAD.No.H. 16665 /42.01.011/2006-07
May 23, 2007
The Chairman/Managing Director
State Bank of India & its Associates
All Nationalised Banks
Jammu & Kashmir Bank Ltd.
IDBI Ltd/HDFC Bank Ltd.
ICICI Bank Ltd. /UTI Bank Ltd.
Dear Sir
Maintenance of Government Accounts -
Interest on Delayed Remittances and
Excess/Double Reimbursement
Please refer to our Circular No.RBI/2006/169 (DGBA.GAD.No.H.7377/42.01.011/2006-07) dated November 7, 2006 on the above subject.
We advise that the rate of interest on delayed remittances and double/excess reimbursement would remain unchanged at 8% (i.e. Bank Rate - 6% + 2%) till further instructions.
Yours faithfully
(A.S. Kulkarni)
Deputy General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/410 · issued 23 May 2007. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems to apply 8% interest on delayed remittances and excess/double reimbursements for government accounts.
📜 Compliance
Review past transactions since November 2006 to ensure correct interest calculation and payment.
Train staff handling government accounts on the unchanged rate and calculation formula (Bank Rate - 6% + 2%).
Monitor RBI circulars for any future changes to this rate.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (State Bank of India and its associates, All nationalised banks, Jammu & Kashmir Bank Ltd., IDBI Ltd., HDFC Bank Ltd., ICICI Bank Ltd., UTI Bank Ltd., Any bank maintaining government accounts), your first concrete step on “RBI keeps interest on delayed govt remittances at 8%” is: “Update internal systems to apply 8% interest on delayed remittances and excess/double reimbursements for government accounts.” (RBI issued this 23 May 2007).
Circular: RBI/2006-2007/410 -- RBI keeps interest on delayed govt remittances at 8%
Issued: 23 May 2007
Action required: Update internal systems to apply 8% interest on delayed remittances and excess/double reimbursements for government accounts.
Action required: Review past transactions since November 2006 to ensure correct interest calculation and payment.
Action required: Train staff handling government accounts on the unchanged rate and calculation formula (Bank Rate - 6% + 2%).
Action required: Monitor RBI circulars for any future changes to this rate.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3553&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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