What changed
RBI has introduced a standalone, consolidated direction specifically for payments banks on interest rates for deposits, effective upon placement on RBI website. The directions define key terms like 'Daily Product' and 'Savings Deposit' and mandate a board-approved comprehensive interest rate policy. They also specify that current accounts remain non-interest bearing and outline rules for additional interest payments.
What it means for you
Payments banks must now align their deposit interest rate policies with this new framework, ensuring board approval and compliance with defined terms and conditions. The directions clarify that current accounts cannot earn interest, while savings deposits must follow the daily product method for interest calculation. Banks need to review and update their internal policies to avoid regulatory gaps.
What you must do
- Review and update your bank's interest rate policy on deposits to comply with the new Directions.
- Ensure board or committee approval for the revised comprehensive interest rate policy.
- Verify that current accounts are correctly classified as non-interest bearing as per the definition.
- Align savings deposit interest calculation with the 'Daily Product' method as defined.
Who it affects
Payments Banks, Compliance departments of payments banks, Board of Directors of payments banks, Deposit operations teams
Do these Directions apply to all deposits of payments banks?
They apply to domestic rupee deposits, including current accounts and savings deposits, but not to term deposits or foreign currency deposits.
Can payments banks pay interest on current accounts under the new Directions?
No, the Directions define current accounts as non-interest bearing demand deposits, so interest cannot be paid on them.
What is the effective date of these Directions?
The Directions came into effect on November 28, 2025, the date they were placed on the RBI website.