The Reserve Bank of India has has decided to permit banks to set their own policies regarding foreclosures of Term Deposits, Daily Deposits and Recurring Deposits for the purpose of better Asset Liability Management (ALM).
Originally the banks were bond by the condition that when a Term Deposit is foreclosed for the purpose of a new term deposit in the same branch no fine/penalty can be levied as long as the new term deposit is for a longer period than the balance time of the original one.
This change now lets the banks formulate their own interest rate policies on foreclosure of term deposits.
RBI Circulars Issued on 28.5.2012:
Originally the banks were bond by the condition that when a Term Deposit is foreclosed for the purpose of a new term deposit in the same branch no fine/penalty can be levied as long as the new term deposit is for a longer period than the balance time of the original one.
This change now lets the banks formulate their own interest rate policies on foreclosure of term deposits.
RBI Circulars Issued on 28.5.2012:
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