RBI amends Master Directions on Interest Rate on Deposits

RBI amends Master Directions on Interest Rate on Deposits

The Reserve Bank of India has issued amendments to Master Direction - Reserve Bank of India (Interest Rate on Deposits) Directions, 2016 (MD-Interest Rate on Deposits Directions) and Master Direction – Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016 (MD-Cooperative Banks Directions).

1. Section 19(h) of MD-Interest Rate on Deposits Directions and Section 18(h) of MD-Cooperative Banks Directions shall be amended as follows:

The Overnight Alternative Reference Rate2 for the respective currency / Swap rates quoted / displayed by Financial Benchmarks India Pvt. Ltd. (FBIL) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits.

2. Section 28 of MD-Interest Rate on Deposits Directions and Section 27 of MD-Cooperative Banks Directions shall be amended as follows:

Scheduled commercial banks shall not:

(h) Open a savings deposit account in the name of Government departments / bodies depending upon budgetary allocations for performance of their functions / Municipal Corporations or Municipal Committees / Panchayat Samitis / State Housing Boards / Water and Sewerage / Drainage Boards / State Text Book Publishing Corporations / Societies / Metropolitan Development Authority / State / District Level Housing Co-operative Societies, etc. or any political party or any trading/business or professional concern, whether such concern is a proprietary or a partnership firm or a company or an association and entities other than individuals, Karta of HUF, and organizations / agencies listed in Schedule – I.

Explanation

For the purposes of this clause, 'political party' means an association or body of individual citizens of India, which is, or is deemed to be registered with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968 as in force for the time being.

3. Item No. 6 Schedule I of MD-Interest Rate on Deposits Directions shall be amended as follows:

Institutions other than those mentioned in Section 28(h) and whose entire income is exempt from payment of Income-tax under the Income-Tax Act, 1961.

4. Item No. 6 Schedule I of MD-Cooperative Banks Directions shall be amended as follows:

Institutions other than those mentioned in Section 27(h) and whose entire income is exempt from payment of Income-tax under the Income-Tax Act, 1961.

The RBI added that all other instructions in this regard shall remain unchanged.