What changed
Earlier, banks were required to renew frozen term deposits for a term equal to the original term on maturity. Now, the depositor can choose the renewal term, and banks must offer this option. If the depositor does not specify a term, the original term applies.
What it means for you
Banks must update their frozen account renewal procedures to include a clear option for depositors to select the renewal term. This gives depositors more flexibility and reduces potential disputes. Lenders need to ensure their request letters and systems accommodate this choice.
What you must do
- Update the request letter for frozen deposit renewals to include a field for the depositor to choose the renewal term.
- Train staff to inform depositors of the new option when processing frozen account renewals.
- Set system defaults to renew for the original term if the depositor does not specify a choice.
- Review and align internal policies with the revised paragraph 5.8.9 of the Master Circular on Customer Service.
Who it affects
All scheduled commercial banks (excluding RRBs), Depositors with frozen term deposit accounts, Bank operations and customer service teams
What happens if the depositor does not choose a renewal term?
If the depositor does not exercise the option, banks must renew the deposit for a term equal to the original term, as per the earlier practice.
Does this apply to all frozen accounts?
Yes, this applies to term deposit accounts frozen by enforcement authorities, as covered in the Master Circular on Customer Service.