PAYMENT OF INTEREST ON OVERDUE PUBLIC
DEPOSITS
Dated: 4th July 2013
Non Banking Financial Companies (NBFC) are at times required to freeze the term
deposits of customer based on the orders of the enforcement authorities or the
deposit receipts are seized by the enforcement authorities. As doubts
have been raised on the payment of interest on such deposit which have either
been seized by the government authorities, and/or have been frozen till further
clearance is received by the concerned government authorities, the NBFCs are
advised to follow the procedure mentioned below:
- A request letter may be obtained from the customer on maturity. While obtaining the request letter from the depositor for renewal, NBFCs should also advise him to indicate the term for which the deposit is to be renewed. In case the depositor does not exercise his option of choosing the term for renewal, NBFCs may renew the same for a term equal to the original term.
- No new receipt is required to be issued.
However, suitable note may be made regarding renewal in the deposit ledger
- Renewal of deposit may be advised by
registered letter / speed post / courier service to the concerned
Government department under advice to the depositor. In the advice to the
depositor, the rate of interest at which the deposit is renewed should
also be mentioned.
- If overdue period does not exceed 14 days on
the date of receipt of the request letter, renewal may be done from the
date of maturity. If it exceeds 14 days, NBFCs may pay interest for the
overdue period as per the policy adopted by them, and keep it in a
separate interest free sub-account which should be released when the
original fixed deposit is released.
However the final repayment of the principal and the
interest so accrued should be done only after the clearance regarding the same
is obtained by the NBFCs from the respective Government agencies.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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