RBI cuts interest rate on unclaimed deposits by 50 bps to 3.5%

Interest rate on unclaimed deposit amount transferred to Depositor Education and Awareness (DEA) fund has been reduced by 50 basis points to 3.5 per cent, the Reserve Bank said today. In June 2014, RBI had specified that the rate of interest payable by banks to the depositors/claimants on the unclaimed interest bearing deposit amount transferred to the DEA Fund will be 4 per cent simple interest per annum.

"The rate of interest has since been reviewed and it has been decided that the rate of interest payable by banks to the depositors/claimants on the unclaimed interest bearing deposit amount transferred to the Fund shall be 3.5 per cent simple interest per annum with effect from July 01, 2018," RBI said.

The settlement of all claims received by the banks on or after July 1, 2018 will be at 3.5 per cent, until further notice, it added.

Unclaimed deposits are those which has not been claimed by depositors for a period of 10 years. Such amount is transferred by the banks to the fund for education and awareness purpose.

In case of demand from customers/ depositors whose unclaimed amount/deposit had been transferred to Fund, banks repay the amount, along with interest.

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In another notification, the RBI said in order to enable Systemically Important Core Investment Companies (CIC-NDSI) to act as a sponsor of InvITs, it has been decided to permit CIC-NDSIs to hold InvIT units only as a sponsor.

Exposure of such CICs towards infrastructure investment trust (InvIT) shall be limited to their holdings as sponsors and shall not, at any point in time, exceed the minimum holding of units and tenor prescribed by SEBI.