Among the range of debt instruments or risk-free investments, fixed deposits are considered the best to bet. Fixed Deposits are the secure investments in which a specific amount of money is deposited for a fixed period of time. Fixed Deposits come in a variety of maturities. It might last anywhere from seven days to ten years. As a result, fixed deposits can be a safe investment for short, medium, and long-term needs. Till the end of the maturity period, the accumulated corpus can not be withdrawn. However, do you know that if a Term Deposit matures with no proceeds, the amount left unclaimed with the bank would earn the same rate of interest as a savings account? Let's know-how.
The Reserve Bank of India (RBI) said on Friday that depositors can now receive interest if their Term Deposit (TD) matures and the amount left unclaimed. The RBI recently claimed in a circular that "On a review...it has been decided that if a term deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract rate of interest as applicable to savings account or the contracted rate of interest on the matured TD, whichever is lower."
Deposits in all commercial banks, small finance banks, local banks, and cooperative banks are subject to the new rules. When a subscriber does not make any transactions in the account for ten years or longer, the deposit is classified as unclaimed by the RBI. Unclaimed bank deposits comprise deposits in current and savings accounts, fixed deposits, and other bank deposits such as recurring deposits, annuity, cumulative, reinvestment deposits and so on. Every month, unclaimed deposits are transferred to the Reserve Bank of India's Depositor Education and Awareness (DEA) Fund. A body established by the RBI allocates the funds transferred to the fund by various banks in government securities and thus pays interest on deposits by the income generated under the fund.