The Reserve Bank of India (RBI) released a circular on Friday suggesting changes in rules for Fixed Deposits (FDs)/ Term Deposits (TDs). The new rules imply that after an FD has reached its maturity, and yet lies unclaimed, the customer will have to bear the loss in terms of interest in savings.

The RBI, however, did mention in its circular that customers are still eligible for earning interest after a Term Deposit matures and proceeds are unpaid.

“It has been decided that if a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract a rate of interest as applicable to a savings account or the contracted rate of interest on the matured TD, whichever is lower,” the RBI stated in a statement.

The RBI also mentioned that if payment of an FD is not made or it is kept in the bank unclaimed post its maturity, then an interest rate will be applied in accordance with the savings account or the matured FD, whichever contracts lesser interest.

Up until now, unclaimed deposits post Term Deposit maturity used to draw an interest rate similar to savings deposits.

All commercial banks, small finance banks, local area banks, urban cooperative and state cooperative banks will be following these new guidelines set by the RBI.

RBI declares a deposit unclaimed if no transaction has been made by the customer in the account for 10 years or more. For clarity, unclaimed deposits constitute funds kept in current and savings accounts, FDs, and other deposits with banks.

If after a period of 10 years, no transaction has been made and the deposit has been classified as unclaimed, all the money is transferred to RBI’s Depositor Education and Awareness (DEA) Fund on a monthly basis. The DEA fund in FY 2019-20 amounted to nearly Rs 33,114 crore. The money in the fund is invested in building government securities by a committee set up by the RBI.