What changed
Earlier, RRBs were required to pay interest on savings and term deposits at quarterly or longer rests. Now, with core banking platforms in place, RBI has given RRBs the option to pay interest at intervals shorter than quarterly.
What it means for you
RRBs can now offer more frequent interest payouts, potentially making their deposit products more attractive to customers. This flexibility may help RRBs compete better with other banks, but they must ensure their systems can handle shorter compounding cycles without operational issues.
What you must do
- Review and update your deposit product terms to offer interest payment intervals shorter than quarterly if desired.
- Ensure your core banking system can handle the chosen interest payment frequency accurately.
- Communicate the new option to customers through appropriate channels.
- Maintain compliance with existing guidelines for FCNR(B) deposits, which remain unchanged.
Who it affects
Regional Rural Banks (RRBs), Depositors with rupee savings and term deposits at RRBs, RRB IT and operations teams
Does this circular apply to FCNR(B) deposits?
No, the existing guidelines for FCNR(B) deposits remain unchanged.
Can RRBs continue to pay interest at quarterly rests if they prefer?
Yes, the circular gives RRBs an option to pay at shorter intervals, but they are not mandated to change from quarterly rests.