The Reserve Bank of India issued a Circular dated September 16th 2022 regarding the Master Directions on Interest Rate on Deposits and amended Master Directions - RBI (Interest Rate Deposits). According to the RBI's guidance, the reference rates mentioned in the notification will be quoted as well as displayed by Financial Benchmarks India Private Limited (FBIL) on January 31st 2022. The relevant sections of both the Master Directions on Interest Rates on Deposits have been appropriately modified in this regard.
Furthermore, the instructions regarding eligibility for opening a savings account in Sections 28 (h) and 27 (h) of the aforementioned Master Directions (MDs) dated March 3rd 2016 and May 12th 2016, respectively, and item No. 6 in Schedule I of the two MDs have been modified to make them more explicit.
According to the Master Directions 2016, the Foreign Exchange Dealers Association of India shall quote/display reference rates for calculating interest rates on FCNR (B) deposits (FEDAI). However, as of January 31st 2022, the above-mentioned reference rates are quoted/displayed by Financial Benchmarks India Private Limited (FBIL). The relevant sections of the Master Directions dated March 3rd 2016, and May 12th 2016, have been appropriately modified in this regard.
According to the provisions the MD 19(h)-The Overnight Alternative Reference Rate for the respective currency/swap rates that are quoted/displayed by Financial Benchmarks India Private Limited (FBIL) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits.
Amendments to the provision, FBIL has taken over for FEMA MD28(h): Establish a savings deposit account in the name of Government Departments/Bodies based on budgetary allocations for the performance of their functions for Municipal Corporations/Committees, Panchayat Samitis, State Housing Boards, Water/Sewerage/Drainage Boards, State Text Book Publishing, Corporations/Societies, Metropolitan Development Authority, State/District Levels, Housing Co-operative Societies, etc. In addition to the previous provision, the MD Item No. 6 18(h), it also mentions that Institutions other than those mentioned in Section 28(h) whose entire income is exempt from payment of Income tax under the Income Tax Act, 1961.
In the case of a Co-operative Bank, it shall not open a savings deposit account in the name of Government Departments/Bodies depending upon budgetary allocations for the performance of their functions for Municipal Corporations/Committees, Panchayat Samitis, State Housing Boards, Water/Sewerage/Drainage Boards, State Text Book Publishing, Corporations/Societies, Metropolitan Development Authority, State/District Levels, Housing Co-operative Societies, etc or any Political Party or any trading/business or professional concern, whether such concern is proprietary or partnership firm or a company or association or entities other than individuals, Karta of HUF, and organizations/agencies listed in Schedule – I.
