Siddartha Karnani Comments on Delhi High Court Ruling on Interest Rate Reduction for Fixed Deposits

Siddartha Karnani, Partner at King Stubb & Kasiva, has commented in ET Wealth Online on a Delhi High Court ruling concerning a bank’s reduction of the interest rate on a ₹5.89 crore fixed deposit from 7.75% to 3.5%, citing non-renewal of the deposit.

Siddartha explained that banks must comply with applicable Reserve Bank of India (RBI) regulations when determining interest on matured fixed deposits. Where a term deposit matures and the proceeds remain unpaid, the amount is generally eligible for interest at the applicable savings account rate, in accordance with RBI directions. However, banks must ensure consistency in their treatment of comparable deposits, transparently disclose their interest calculation methods, and act on clear auto-renewal instructions provided by depositors.

He further emphasised that deposits maintained pursuant to court orders, arbitral directions or liens require particular care. Banks cannot treat such deposits as ordinary customer fixed deposits without accounting for the governing directions. Where a proposed change would affect the treatment of a court-ordered deposit, the bank may need to seek further directions from the court. In this case, the bank’s failure to appropriately account for the court-ordered nature of the deposit and communicate its approach was central to the dispute.

Read the full article here: https://economictimes.indiatimes.com/wealth/legal/will/bank-reduced-interest-on-rs-5-89-crore-fd-from-7-75-to-3-5-citing-non-renewal-delhi-hc-rejects-arbitrary-rate-cut-on-this-ground/articleshow/134884399.cms 

Last Updated on 14 October, 2026