Fixed Deposit Account rules


1) Opening of deposit accounts

Application for fixed/short deposits and deposits at notice is taken on Form No.401 for individuals and Form No.401A for non individuals.

All time deposit accounts shall be properly introduced. For all subsequent deposit, a simple Application-cum-Deposit slip is to be filled.

2) Period and minimum amount of different types of deposits

Minimum period:-

At present, the minimum period for a term deposit shall be 7 days  for deposit amount of Rs.100/- lacs and above & minimum 15 days for amounts less than Rs.100/- lacs.

Maximum period : - 120 months

In special cases, say, under the order of a court or where interest of a minor is involved and in the case of institutions, government undertakings, corporate bodies to meet their special  needs like creation of sinking fund/amortisation fund etc. or for individuals for any of their special needs by way of accounts  opened under special recurring/cumulative deposit scheme, the deposit may be accepted for periods over 10 years. However, the period of deposit should not exceed 20 years.

Minimum amount:-

3) Operational instructions

Term deposit accounts can be opened with instructions 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.

4) Additional documents/forms to be obtained

PAN/GIR number or Form 60 /61. Other documents as per KYC norms.

Photographs of the depositors except in case of existing accounts (having photographs)

5) Nomination facility

Available

6) Deposit accounts of minors:-

In sole name – if the minor is 10 years and above and 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 Rs.1,00,000/-. However, there is no limit for  accepting deposits from minors above the age of 14 years.

Pre-payments of fixed deposit receipts issued to minors can  be allowed only on his/her attaining majority.

7) Renewal of deposits :- Requirements

1. Duly discharged fixed/short deposit receipt along with request for renewal.
   
   
2. Where receipts are held in safe custody or where only  acknowledgement is issued in lieu of the deposit receipt, discharge not required.
   
   
3. 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:-
   
   
1. Letter of request to be given in prescribed format.
2. No new receipt will be issued.
3. Renewal of the deposit will be advised by a registered letter to the concerned government department, under advice  to the depositor.
4. Where an advance is granted against a deposit, the relative receipt should be discharged by all the parties.
   
   
4. No fresh receipt is issued. Endorsements made on the space provided on the existing FDR.

8) Automatic Renewal of deposits:-

A matured term deposit will be renewed on its due date itself, for further period of one year at the applicable rate prevailing on the due date, if not instructed otherwise.

In respect of term deposit  issued  for less than one year, the concerned  matured  term  deposit  will be renewed on its due date  itself  for the same period  with the applicable  interest  rate prevailing  on the due date, if not instructed otherwise.

If at a later date (i.e. after automatic renewal) the depositor requests for  prepayment of old deposit, before making payment the receipts duly discharged along with prepayment instructions is to be furnished.

When a depositor at a later date (i.e. after automatic renewal) requests for longer maturity, prepayment as above is to be made without charging penalty and new FDR may be issued as requested.

9) 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 upto Rs.20,000/-) with clear  payment instructions is to be given.

The amount of maturity value in case of deposit under RIRD, 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.

10) 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.

11) 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.

12) Pre-payment of deposits ( period of deposit is more than one year)

The deposit receipt duly discharged and the letter of request for prepayment signed by all the depositors are required.

Payment of interest on pre-mature withdrawal of term deposit w.e.f. 01.03.2012

The rate of interest applicable for premature payment without penalty will be the rate ruling on the date of accepting the deposit (i.e. the date of contract) for the period for which deposit has actually remained with the Bank or the Contracted Rate whichever is lower. Penalty is waived if following conditions are satisfied.i.e.

1. Face value of deposit does not exceed Rs.5/- lacs and
2. the said  Deposit has  remained with the bank for  a minimum period of 12 months.

Interest will be paid after deducting penalty of 1% from such applicable rate or the contracted rate whichever is lower in the cases which are subject to charging penalty. i.e Deposit  not satisfying any of the condition mentioned at a)  above

Further, waiver is allowed where:-

1. Deposit is renewed for a period not less than unexpired period.
2. 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.

13) Rules regarding payment of interest and calculation of 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 or half yearly interest on  completion of the month/quarter/half year calculated from the date of deposit or end of each calendar month / quarter / half year, whichever is later.

Interest payable under the Monthly Income Plan is the discounted value of interest payable in terms of IBA code for Banking practice. i.e. interest received under Monthly Income Plan will be less than simple interest.

For calculation of interest on term deposits for periods  less than -12- months, the following procedure would be  adopted:-

On deposits for period upto -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 interest on deposits to customers Current / Savings Bank account.

Method of calculation of interest adopted for Term deposit (period of deposit more than a year) w.e.f. 01.03.2012

In all cases of domestic term deposits (period of deposit more than a year) where the terminal quarter is incomplete, interest will be calculated for the actual number of days, reckoning the year 365/366 days viz. the calculation of interest on such deposits will be in order of completed quarters and days.

Standing Instructions are accepted for credit of periodical interest in case of monthly / quarterly / half yearly interest on deposits to customers Current / Savings Bank account.

Rules regarding payment of interest and calculation of term deposit mentioned under FD rules –( Deposits- Term /Fixed deposit section – FD rules)

14) Higher rate of interest to Senior Citizens

An additional rate of interest @ 0.50% on the Term Deposits (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.

15) Certificate of interest paid:-

At the request of accountholders, branches would issue certificates of interest paid to them on their various deposit  accounts.

16) Procedure in case of lost receipts:-

1. An application from the depositor is to be given.
2. Applicants must be properly identified.
3. Duplicate receipt may be issued only in cases, where - the un-expired period of deposit exceeds -12- months or the depositor requires a loan against the receipt.
4. In all other cases, only a letter of acknowledgement of deposit is given to the depositor.
5. An indemnity bond is to be obtained in the prescribed form  in all cases.
6. One or two surety/ies considered good for the amount involved, must execute the indemnity along with the  depositor/s.
7. Sureties may be waived in the following circumstances.

If the deposit is renewed for a further period of atleast -12- months or Where the depositors maintain other well conducted accounts.

17) Addition or deletion of name in fixed deposit receipts and recurring deposit accounts

If the existing depositor/s make/s 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 except 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.

18) Procedure for transfer of time deposit account to another branch:-

Proceeds of time deposit may be transferred on maturity from one  branch to another at the request of the depositor, free of  charge, if the deposit is renewed at the other branch for a  minimum period of -30- days.

Time deposits can also be transferred before maturity to another  branch, at the request of the depositors.

19) Mode of repayment 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.

20) 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.

21) DEDUCTION OF INCOME TAX AT SOURCE FROM PAYMENT OF INTEREST ON TIME DEPOSITS (SECTION 194A OF INCOME TAX ACT 1961)

(Sec.194A): The Income Tax Act has been amended w.e.f. 1st July 1995 and as per provision of the Income Tax, TDS is applicable in case of Time deposits made  from 1st July 1995 and onwards.

The salient provisions of this section are as under:-

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.10,000/- in a financial year.

For  this purpose time deposit means deposits repayable on the expiry of a fixed period i.e. Short Deposit, Fixed Deposit, RIRD, etc. and Yatha Shakti Jama Yojana.

Recurring  deposit, savings deposit and current deposit are excluded for this purpose.

Tax is to be deducted either at the time of credit to the account or payment of interest to the depositor whichever is earlier.

In case the depositor submits following Form before end of June every year, no tax may be deducted.

Non-corporate customers other than Senior Citizens - Form No.15G along with PAN (w.e.f. 1st April 2010)

Senior Citizens i.e. individuals of the age of -65- years or more - Form No.15H  along with PAN (w.e.f. 1st April 2010)

w.e.f. 1st April 2010 I.T.Department has made it mandatory to quote Permanent Account No. (PAN) by deductees in all cases where TDS is applicable, failure of which would attract the TDS at a higher rate of 20% (against normal rate of 10%) or normal rate whichever is higher. Further it has also been made compulsory to mention PAN on form No.15G / 15H w.e.f. 1st April 2010.

Thus, TDS is deducted where total interest exceeds Rs.10,000/- on all time deposits as under:-

For Individuals:

1. Where Form No.15G / 15H alongwith PAN submitted by the customer – NO TDS. Subject to individual income exempted under Income Tax for that year.
   
   
2. Where Form No.15G / 15H without PAN is submitted by the customer – TDS @20%
   
   
3. Where PAN is submitted by the customer – TDS @10%
   
   
4. Where PAN is not submitted by the customer – TDS @20% (even if Form No.15G / 15H is submitted)
   
   
5. In case of NRO deposit concession in TDS is allowed under double tax avoidance treaty. TDS is deducted as under:-
   
   
   • If PAN is submitted with a declaration applicable under Double Tax Avoidance Treaty - TDS is deducted @ applicable rate for the country of residence of the customer.
   • If PAN is submitted without declaration - TDS is deducted @30%
   • If declaration is submitted without PAN - TDS @normal rate or 20% whichever is higher.
   • If PAN and declaration is not submitted - TDS @30%

For others:--

TDS is deducted @20%

Issue of certificate:--

A consolidated TDS certificate will be issued at the end of financial year.

Treatment of Joint Deposits-

For accepting deposits of senior citizens jointly, with other persons below the age of sixty years, under the special scheme for senior citizens, it should be ensured that the name of the senior citizen is given as the first name in the application.

22) ADVANCES AGAINST OUR BANK'S TIME DEPOSIT RECEIPTS

Advances against our Bank's time deposit receipt can be sanctioned keeping a minimum margin of 5% on the amount of the deposit receipt on the terms and conditions which may be obtained from the branch.

For further details, please contact the Bank of Baroda Branch nearest to you.

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