rates must be approved by the board or a body to whom the board has delegated this
• Banks may offer deposits on a floating rate. These must be clearly tied to an anchor
• Interest should be paid at quarterly or longer rests. Interest is normally paid on the
maturity of the deposit.
• Interest can be paid monthly by discounting the quarterly interest.
• Interest is calculated on the daily balance.
• On deposits of less than 3 months or where the quarter is incomplete interest should be
paid on the number of days reckoning the year at 365 days.
• In leap years some banks have calculated interest on 366 days. The Reserve Bank, in this
instance, leaves it to the bank to determine how interest is to be calculated.
• Interest is credited only if it is one rupee or more.
• Differential rate of interest can be paid on a single term deposit of Rs. 15 lakhs and
above but not on the aggregate of individual deposits where the total exceeds Rs. 15 lakhs.
• Scheduled banks with deposits of less than Rs. 25 crores are permitted to give, at their
discretion, an additional ½%
• Banks are permitted to pay their employees an additional 1% interest. This is subject to a
declaration from the employee that the money belongs to him.
• Additional interest of 1% is also payable to retired employees (but not those who have
resigned) and the spouse of a deceased retired employee.
• Additional interest of 1% per annum may be paid to an association or fund whose
members are employees of the bank.
• Additional interest of 1% per annum may also be paid to the chairman and executive
director of the bank during their tenure.
• All transactions including the payment of interest should be rounded off to the nearest
• The Reserve Bank permits banks to offer senior citizens a higher rate of interest on their
• Public sector banks may pay additional interest of 1.28% per annum over the normal rate
of interest on deposits over 2 years to Armed Forces funds if these deposits are not linke