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Interest on Bank Fixed Deposits ("Fixed Deposits") is calculated at the rate(s) applicable at the time of acceptance of the Fixed Deposit(s), according to the rate(s) fixed by Bank ("Bank") from time to time and in keeping with directives issued by Reserve Bank of India, and considered/paid at quarterly or monthly intervals.
Interest rates are money market (i.e. simple interest) rates for Fixed Deposit tenures upto 6 months and quarterly compounded rates for Fixed Deposit tenures of 6 months and above. However, in case of Traditional Fixed Deposits interest rates are money market (i.e. simple interest) rates irrespective of the tenure.
The method of calculation on interest on a Fixed Deposit, both Traditional and Cumulative is as under For Traditional Fixed Deposits with quarterly payouts interest is calculated based on annual rates (Simple Interest). However, in case of monthly payouts, interest is paid at a discounted value. For Traditional Fixed Deposits with quarterly payout, interest is calculated on the principal amount for completed quarters and then for the balance period, interest is calculated for completed months and further for incomplete month on actual number of days. For Cumulative Fixed Deposits, interest is compounded quarterly on completion of exact quarters. For the broken period beyond completed quarters, simple interest is calculated on the cumulated deposit amount for remaining number of days.
In case of premature withdrawal of the Fixed Deposit the interest is calculated on the principal amount for completed quarters and then for the balance period, interest is calculated for completed months and further for incomplete month on actual number of days. While prematurely closing a Fixed Deposit, interest on the Fixed Deposit for the period that it has remained with the Bank will be paid at the rate applicable to the period for which the Fixed Deposit remained with the Bank and not at the contracted rate. Further penal rates as applicable will be chargeable.
On Rupee Domestic/NRO/NRE Fixed Deposits repayable in less than three months or where the terminal quarter is incomplete, interest is paid for the actual number of days proportionately
For the purpose of interest calculation calendar year is taken to consist of 365 days irrespective of whether it is a leap year
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