What changed
Previously, agency banks compensated investors at their own savings bank rate for delayed payments. Now, with effect from April 10, 2012, a uniform fixed rate of 8% per annum applies, removing ambiguity from deregulated savings rates.
What it means for you
Banks must pay a standard 8% p.a. for any delay in crediting interest or maturity proceeds on Relief/Savings bonds, regardless of their savings bank rate. This simplifies compliance but may increase costs if delays occur, as 8% is higher than typical savings rates.
What you must do
- Update internal systems to apply 8% p.a. compensation for delayed Relief/Savings bond payments from April 10, 2012.
- Train staff handling bond transactions on the new fixed compensation rate.
- Review past delays to ensure compliance with the new rate for any pending compensations.
- Acknowledge receipt of this circular to RBI as instructed.
Who it affects
Agency banks handling Relief/Savings bonds (SBI, associates, nationalized banks, IDBI, ICICI, Axis, HDFC, SHCIL), Investors in Relief/Savings bonds, Bank operations teams managing bond payments
What is the new compensation rate for delayed bond payments?
A fixed rate of 8% per annum, effective April 10, 2012, replacing the earlier savings bank rate-based compensation.
Does this apply to all agency banks?
Yes, it applies to all listed agency banks including SBI, nationalized banks, IDBI, ICICI, Axis, HDFC, and SHCIL.
Can RBI change this rate later?
Yes, the circular states RBI may review the compensation rate as considered appropriate.