What changed
This master circular replaces the July 1, 2006 version, incorporating all instructions issued up to June 30, 2007. It consolidates existing rules on deposit interest rates, tenors, and related operational guidelines for scheduled commercial banks (excluding RRBs). No new policy changes were introduced; it is a compilation update.
What it means for you
Banks must ensure their deposit products and interest rate policies align with the consolidated guidelines, particularly on minimum tenors, savings rate restrictions, and premature withdrawal penalties. The circular reinforces RBI's statutory authority under Section 35A of the Banking Regulation Act, 1949, making compliance mandatory. Lenders should review their internal circulars and systems to reflect the updated master circular.
What you must do
- Update your bank's internal policy manual to reference this master circular (DBOD.No. Dir. BC. 7/13.03.00/2006-07) as the governing document.
- Verify that all deposit products (domestic, NRO, NRE) comply with the prescribed minimum tenors and interest rate guidelines.
- Ensure staff are trained on the consolidated guidelines, especially for premature withdrawal, overdue deposits, and senior citizen schemes.
- Review and report deposit interest rate changes to RBI as per the notification requirements in section 2.18.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Deposit operations teams, Compliance and risk management departments, Retail and NRI banking divisions
Does this master circular introduce any new interest rate caps or floors?
No. It consolidates existing instructions; banks remain free to set term deposit rates (except savings deposits) as per earlier deregulation. Savings deposit rates continue to be regulated.
Are Regional Rural Banks covered under this circular?
No. The circular explicitly excludes RRBs from its scope of application.
What is the minimum tenor for term deposits under this circular?
The circular states that a customer can earn interest on a term deposit for a minimum period of 7 days, as per the consolidated guidelines.