Mumbai: The Reserve Bank Thursday came out with detailed procedures for payment of interest by NBFCs on public deposits that have been frozen under directions from government authorities.
In a notification, the Reserve Bank said the Non-Banking Financial Companies (NBFC) will have to obtain a "request letter" from such customers on maturity of their deposits for renewal.
If the letter is received within 14 days from the date of maturity, the renewal would have to have be done from the date of maturity, the RBI said.
"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," the RBI said.
The amount from the sub-account would be released when the original fixed deposit is released, it added.
The notification follows doubts raised on the payment of interest on such deposit accounts which have either been seized by the government authorities, and/or have been frozen till further clearance is received by the concerned government authorities.
"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," the RBI said.
It further said if the depositor does not exercise his option to choose the term of renewal, NBFCs may renew the same for a term equal to the original term.