Mumbai: The Reserve Bank on Tuesday instructed banks to compensate investors in Relief or Saving Bonds (government securities) for the financial loss to them on account of delayed credit of interest at a rate of 8 percent.
"...an agency bank should compensate an investor in relief/savings bonds for financial loss due to late receipt/delayed credit of interest warrants/maturity value, at a fixed rate of 8 percent per annum," RBI said in a circular.
Interest on these bonds is paid either through interest warrants by registered post or credited to the investor's bank account.
Until now, banks were compensating the investors for the financial loss at their own savings bank rate.
The RBI's instructions follows deregulation of interest rate on savings bank accounts in October last year.
Under the present scenario of deregulated interest rate on the savings bank account, the RBI said that "in order to avoid ambiguity and variation in compensation rates across different agency banks" the earlier norms have been reviewed.
Relief/Savings Bonds are issued in the form of stock certificate and Bond Ledger Account (BLA) by the RBI and in the form of BLA by the Agency Banks.
Relief/Savings Bonds provide the investors to opt for cumulative/non-cumulative interest payment.
The RBI further said it may review the compensation rate as and when considered appropriate.