What changed
This circular, dated November 8, 2007, reiterates that the penal interest rate on delayed remittances and excess/double reimbursement for government accounts stays at 8% per annum. It confirms no revision from the earlier May 23, 2007 circular on the same subject.
What it means for you
Banks handling government accounts must continue to apply the 8% penal rate for any delays in remitting government funds or for any excess/double reimbursements claimed. This rate is fixed at Bank Rate plus 2%, providing a clear penalty structure. Non-compliance will attract this interest charge, impacting operational costs for banks with processing lags.
What you must do
- Ensure your systems apply the 8% penal interest rate on delayed remittances of government funds.
- Review and update internal processes to prevent excess or double reimbursement claims.
- Train staff handling government accounts on the unchanged penal rate and compliance requirements.
- Monitor remittance timelines to avoid incurring penal interest charges.
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., All banks handling government accounts
Is this circular still in effect?
The source text does not indicate withdrawal status for this specific circular. The header lists withdrawal dates for multiple circulars, but no explicit statement applies to this one. Refer to current RBI directives for the latest penal rate.