Time to closely monitor your bank deposits

Bank deposits have traditionally been safe investment for those who are risk averse. Though the rate of interest is not too attractive and hardly covers for inflation, the latest circular RBI/2021-22/6 dated July 02, 2021 has made the returns even lesser, in case the deposit is not monitored at due date and immediately decided for renewal or otherwise and continues to be overdue for a long period.

Recent bank audit experiences have revealed that many deposit holders do not consciously renew their deposits on maturity and assume that it will continue at the same rate of interest and term as before. While in some cases banks may also this, a bank is obliged to pay only saving bank rate of interest or the contracted rate of interest for the overdue period.

Interest on overdue domestic deposit under Section 9 (b) of?Master Directions issued by Reserve Bank of India (Interest Rate on Deposits) Directions, 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. The change that the latest circular RBI/2021-22/6 dated July 02, 2021as per this current circular is that from henceforth such overdue deposits shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower.

In times when everyone is facing uncertainties of pandemic, and financial insecurity is a concern and interest rates are reflecting a declining trend in recent years, it makes sense to closely monitor one's bank deposits, to ensure that interest earned is optimized.