No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2021-22/66 · issued 02 Jul 2021 · ~2 min read
Quick answerRBI now requires banks to pay interest on overdue term deposits at the lower of the savings account rate or the original contracted rate, replacing the earlier rule of only savings rate.
What changed
Previously, unpaid matured term deposits earned interest at the savings deposit rate. The new rule allows banks to pay either the savings account rate or the contracted rate on the matured TD, whichever is lower.
What it means for you
Banks must now pay interest on overdue term deposits at the lower of the savings account rate or the contracted rate. This may reduce interest costs for banks if the contracted rate is lower than the savings rate, but could also mean customers receive less than before if their contracted rate is below savings rate. The change offers no flexibility to pay a higher rate; it mandates the lower rate.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update your system logic for overdue term deposit interest calculation to compare savings rate and contracted rate, applying the lower of the two.
Amend relevant internal policies and customer-facing terms to reflect the new rule.
Train staff on the revised interest computation for matured but unclaimed deposits.
Ensure compliance with the amended Master Directions for both commercial and co-operative banks.
Who it affects
All Scheduled Commercial Banks including RRBs, Small Finance Banks, Local Area Banks, Primary (Urban) Co-operative Banks, District Central Co-operative Banks, State Co-operative Banks
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 07:47 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the effective date of this change?
The circular is dated July 2, 2021. The source does not specify an explicit effective date beyond the date of the circular.
Does this apply to all types of term deposits?
Yes, it applies to all domestic term deposits that mature and remain unpaid.
How does this affect customers with overdue deposits?
Customers will now receive interest at the lower of the savings account rate or their original contracted rate, which could be lower than the previous savings-only rate if their contracted rate is below savings rate.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #297: DoR.SPE.REC.29/13.03.00/2021-2022 — "Review of Instructions on Interest on Overdue Domestic Deposits" dated July 2, 2021”
📜 Read the original circular — full text as issued by RBI
RBI/2021-22/66
DoR.SPE.REC.29/13.03.00/2021-2022
July 02, 2021
All Scheduled Commercial Banks (including RRBs)
All Small Finance Banks
All Local Area Banks
All Primary (Urban) Co-operative Banks/ District Central Co-operative Banks/ State Co-operative Banks
Dear Sir / Madam,
Review of Instructions on Interest on overdue domestic deposits
Please refer to Section 9 (b) of Master Direction - Reserve Bank of India (Interest Rate on Deposits) Directions, 2016 dated March 3, 2016 , and the Master Direction - Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016 dated May 12, 2016 in terms of which if a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings deposits.
2. On a review of these instructions, it has been decided that if a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.
3. The relevant section of Master Directions are amended accordingly as indicated in the Annex .
Yours faithfully,
(Thomas Mathew)
Chief General Manager
ANNEX
Amendments to Master Directions
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/66 · issued 02 Jul 2021. The plain-English explanation above is BankPulse’s own independent summary.
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 03 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=12125&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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