Fixed deposit Account rules
Application for fixed/short deposits and deposits at notice is taken on Form for individuals and non-individuals.
All time deposit accounts shall be properly introduced. For all subsequent deposit, a simple Application-cum-Deposit slip is to be filled.
Period and minimum amount of different types of deposits:
Minimum period:- 30 days
Maximum period:- 120 months
Minimum amount:- The minimum amount accepted for fixed/short deposit is Rs.1,000/-.
Term deposit accounts can be opened with instructions payable to 'Self ' , payable to ’either or Survivor', payable jointly, payable to any one of the depositors etc. It can also be opened with instructions payable to "Former or Survivor" or "Former, Survivors Jointly or Last Survivor" or "Latter or Survivor" in which case operational/ payment instructions at the time of opening the account or subsequent variations, if any, in these instructions, should be signed by all the joint depositors.
Deposit accounts of minors:
In sole name – if the minor is above 10 years and below 18 year old can read and write.
In joint name with natural guardian if minors are less than 10 years of age.
The maximum amount that can be accepted for deposit in such account is. 1, 00,000/-. However, there is no limit for accepting deposits from minors above the age of 14 years.
Renewal of deposits - Requirements:
Deposit will be automatically renewed for the same period and with current interest rate for period of deposit if no specific instruction from account holder.
Duly discharged fixed/short deposit receipt along with request for renewal.
Where receipts are held in safe custody or where only acknowledgement is issued in lieu of the deposit receipt, discharge not required.
Where receipts are lodged with the government departments, as security in lieu of earnest money etc. and the concerned authorities are not willing to part with them, amount of the deposit is renewed for a further period without production of deposit receipt following the procedure detailed hereunder:-
a) Letter of request to be given in prescribed format.
b) No new receipt will be issued.
c) Renewal of the deposit will be advised by a registered letter to the concerned government department, under advice to the depositor.
d) Where an advance is granted against a deposit, the relative receipt should be discharged by all the parties.
No fresh receipt is issued. Endorsements made on the space provided on the existing FDR
Payment of deposit receipt/s on due date.:
Deposit receipt/s duly discharged by all the depositors (on revenue stamp in case of cash payment up to 20,000/-) with clear payment instructions is to be given.
No cash payment of Matured Deposit Receipt amounting more than Rs. 20000/- aggregrating
The amount of maturity value in case of deposit under cumulative deposit scheme, and the principal amount along with the residual interest, if any will be paid by:-
Credit of depositors account with the Bank.
Credit of depositors account with any other Bank through NEFT / RTGS.
Issuance of DD / Bankers Cheque as per instruction of the depositor.
Payment to a third party/nominee/legal heir.
The proceeds of a deposit receipt is not payable to a third party or to a collecting bank unless the receipt is discharged and is accompanied by a separate letter of authority signed by all depositors authorising payment to the third party or to the Bank, as the case may be.
Nominee vis-à-vis legal heirs.:
If on the death of the depositor, both the nominee and the legal heir make their claims simultaneously in respect of the deposit, the bank would take note of the legal heir holding succession certificate.
However, such legal heirs are advised to bring from the court an injunction restraining the bank from effecting payment to the nominee/s.
The Bank will get valid discharge by paying the nominee so far as any legal heir has not produced, in the meanwhile, any decree, order, certificate or other authority from a court of competent jurisdiction.
Prepayment of deposits
The deposit receipt duly discharged and the letter of request for prepayment signed by all the depositors are required.
Normally on prepayment a penalty of 1% below the interest rate ruling on the date of making deposit for the period for which deposit has actually run is deducted.
Waiver is allowed where -
Deposit is renewed for a period not less than unexpired period.
Deposit is paid to nominee / legal heirs / claimants in deceased accounts. In this case interest at applicable rates for which deposit has actually run is paid.
Rules regarding payment of interest on time deposits.:
Interest accrued on a time deposit, would ordinarily be paid, only on maturity. However, at the request of the depositor, interest on deposits of -12- months and over, can be paid before maturity on the following basis:-
Monthly, quarterly , half yearly or yearly interest on completion of the month / quarter / half year / yearly calculated from the date of deposit or end of each calendar month / quarter / half year / yearly, whichever is later.
For calculation of interest on term deposits for periods < 12 months, the following procedure would be adopted -
On deposits for period up to -182- days, the interest is calculated for the actual number of days on the basis of -365- days in a year.
On deposits for period more than -182- days, the interest is calculated on monthly basis for the completed months and for residual period, on actual number of days.
Standing Instructions are accepted for credit of periodical interest in case of monthly / quarterly / half yearly / yearly interest on deposits to customers Current / Savings Bank account.
Higher rate of interest to Senior Citizens:
An additional rate of interest @ 0.50% on the Term Deposit having period more than 15 months only. (including Recurring Deposits and Term Deposits under other schemes) of senior citizens resident in India who has completed the age of 60 years is paid as per guidelines. Super Sr. Citizen above 75 years, as per our bank’s guidelines.
Procedure in case of lost receipts:-
An application from the depositor is to be given.
An indemnity bond is to be obtained in the prescribed form in all cases.
One or two surety/ies considered good for the amount involved, must execute the indemnity along with the depositor/s.
If the deposit is renewed for a further period of at least 12 months or where the depositors maintain other well conducted accounts. At the discretion of bank.
Addition or deletion of name in fixed deposit receipts and recurring deposit accounts.:
If the existing depositors makes a request either to add the name of a close relative (his consent should be obtained) or delete the name of one of the existing joint accountholders (he should also sign the letter of request), the same are allowed, as per under mentioned procedure -
A letter signed by the depositor/all the joint depositors should be given requesting the Bank to add the name of a relative/ friend or to delete the name of one of the existing joint depositors. However, a substitution of name is not permitted.
Fresh account opening form and KYC documents incorporating revised operational instructions, signed by the following should be obtained:-
1. In case of addition, the existing depositor/s and the person whose name is to be added and
2. In case of deletion the existing depositors accept the person whose name is to be deleted.
The fact of addition of the name or deletion of the name of one of the joint depositors, will be noted on the relative deposit receipt under authentication along with the date of such addition / deletion.
Fresh deposit receipt will not be issued.
In case of demise of one of the depositors, the request for deletion of his name should be in writing supported by the death certificate, signed by all the surviving depositors giving revised operational instructions. If the surviving depositor/s’ request/s to add name/s of relative/s, such request may be acceded to and the additions may be made on the receipts.
Deletion of name of joint accountholder/s in case of operational instruction - Payable to Former or Survivor, latter or Survivor or Former, Survivors jointly or the Last Survivor is not permitted.
Mode of payment of time deposits.
In terms of Income Tax Act, 1961 as amended, where aggregate amount of all deposits repayable after notice or repayable after a period (i.e. all time deposits including matured time deposits) held by a person singly or jointly with others at a branch of the Bank together with interest to be paid on such deposits (i.e. excluding interest already paid) is Rs. 20,000/- or more, the repayment will be made by means of "A/c Payee" Banker's Cheque/draft or by crediting the account of such depositor.
Payment of periodical interest can be made in cash. (Subject to RBI guideline & Income Tax act)
Safe custody of deposit receipts.:
At the request of depositor/s, including non-resident accountholders, FDRs / SDRs can be accepted in safe custody by obtaining specific written instructions from all the depositors regarding payment of interest, disposal of proceeds on the due date etc.
Deduction of Income Tax at source from payment of interest on time deposits (Section 194A of Income Tax Act 1961) (Sec.194A):
Section 194A deals with deduction of TDS form interest on time deposits. For this purpose time deposit means deposits repayable on the expiry of a fixed period i.e. Fixed Deposit (including recurring deposits).
Section 194A deals with payments made to resident.
From F.Y. 2019-20 onwards Income tax is to be deducted in cases where the total interest paid or credited on all time deposits with a branch in the name of a depositor, whether singly or jointly (as first named person) exceeds Rs. 40,000/- in a financial year.
From F.Y. 2018-19 onwards no TDS will be deducted on interest earned up to Rs. 50,000/- by senior citizens.
Following are the applicable rates of TDS:
10% when the PAN is furnished
20% if the PAN is not provided.
For NIL deduction of TDS the following forms can be submitted by customers:
For Individuals (below the age of 60 years):
the recipient is a person other than a company or a firm.
Total income does not exceed Rs. 2, 50,000/-.
Form 15G along with PAN should be submitted by customer to bank.
For Senior Citizen (age of 60 years or above):
the recipient is an individual of the age of 60 years or more.
Total income does not exceed Rs. 5, 00,000/-.
Form 15H along with PAN should be submitted by customer to bank
It is recommended to submit Form 15G/15H at the beginning of every financial year.
Section 195: TDS on payment of interest to non-resident
Payments made to non- residents are also covered under TDS mechanism. However, tax in such a case is to be deducted as per section 195.
TDS under this section is deducted at the rate of 30% plus applicable surcharge.
Section 194N: TDS on cash withdrawals
As per our honorable Finance minister Nirmala Sitharaman, in her recent budget speech, regarding 2% TDS above Rs. 1 crores cash withdrawal form “an account or accounts.
2% TDS on cash payment above Rs. 1 crores removed for payment through APMC’s by commission agent or traders operating under Agricultural Produce Market Committee.
TDS certificate (Form 16A):
TDS certificates are generated for the customers who have submitted their PAN number.
A consolidated TDS certificate will be issued at the end of quarter.
The entries in form 16A for the amount of TDS deducted for a given financial year are also reflected in form 26AS of the customer.