PUNJAB & SIND BANK
HO. RISK MANAGEMENT DEPTT.
HO RMD Circular No. 145/10
Dated: July 1, 2010 / July 16, 2010

ALL BRANCHES/ZONAL OFFICES/ OFFICES

SUB:   GUIDELINES REGARDING:

(A).      PAYMENT OF INTEREST ON PRE-MATURE WITHDRAWAL OF DOMESTIC TERM DEPOSITS OTHER THAN REINVESTMENT.
(B). PAYMENT OF INTEREST ON PRE-MATURE WITHDRAWAL OF DOMESTIC TERM DEPOSITS IN CASE OF CONVERSION OF TERM DEPOSITS, DAILY DEPOSITS OR RECURRING DEPOSITS FOR REINVESTMENT IN TERM DEPOSITS.

This is in supersession to HO P&D Dept. Cir. No.1823 dated 25.04.1997, Cir No. 1897 dated 28.08.1998, Cir. No.1948 dated 19.08.1999, Cir. No. 2309 dated 07.05.2007, HO. Risk Management Dept. Cir. No.33 dated 27.03.2006, Cir. No.45 dated 26.12.2006 and Cir. No 59 dated 06.06.2007. The ALCO, in pursuance to directives of the RBI that banks are free to determine its own penal interest rate of premature withdrawal of term deposits, has decided to revise the guidelines regarding levy of penalty and payment of interest on premature withdrawal of Domestic Term Deposits.

1.

Premature withdrawal of term deposit up to Rs 15 lacs
A penalty of 0.50% to be charged.
While prematurely closing the deposit, the interest on deposit for the period it has actually remained with the bank will be paid at the rate prevailing as on effective date of deposit or contracted rate, whichever is lower.
2. Premature withdrawal of Term deposit of above Rs 15 lacs and up to Rs 5 crore
A penalty of 1% to be charged
While prematurely closing the deposit, the interest on deposit for the period it has actually remained with the bank will be paid at the rate prevailing as on effective date of deposit or contracted rate, whichever is lower.
3. Premature withdrawal of DRI deposits
No penalty is to be charged.
However, while prematurely closing the deposit, the interest on deposit for the period it has actually remained with the bank will be paid at the card rate prevailing as on effective date of deposit or contracted rate, whichever is lower.
4. Premature withdrawal of Term Deposit – Staff Members (including ex-staff member)
No penalty is to be charged.
However, while prematurely closing the deposit, the interest on deposit for the period it has actually remained with the bank will be paid at the rate prevailing as on effective date of deposit or contracted rate, whichever is lower.
The revised guidelines shall be applicable to all the domestic term deposits outstanding as on date of issuance of this circular and to the fresh deposits mobilised henceforward.
5.

Payment of interest on pre-mature withdrawal of domestic term deposits in case of conversion of term deposits, daily deposits or recurring deposits for reinvestment in term deposits

No penalty will be charged at the time of reinvestment in term deposit provided the reinvested deposit remains with the bank for a period longer than the remaining period of original contract.
However, interest for the period for which the deposit has actually run will be paid  at the rate prevalent on the effective date of deposit or contracted rate, whichever is lower
   

Branches have to display this circular at a prominent location in the branch so that customer of the branch take a note of it.

Asst. General Manager (RM)