Additional Interest on deposits of Bank’s Staff

While talking to a former colleague, the other day,  I was informed that bank (PNB) has reduced the interest rate on a term deposit  by 1%, ( additional interest for staff / ex-staff) , which he held jointly with his wife, where colleague’s name is as joint depositor in the said term deposit. Branch officials have taken the plea that additional interest of 1% is not payable on term deposit where the staff member / ex-staff is a joint depositor.  

On this matter RBI directions are very clear. The bank must pay the additional interest irrespective, whether the ex-staff is a depositor or a joint depositor on the term deposit, on the declaration of the ex-staff member as per para 3.8.2  of RBI circular no. 

RBI/2015-16/39 DBR.No.Dir.BC.7/13.03.00/2015-16 Dated July 1, 2015

Relevant paragraphs of the said circular are being given below for ready reference please.

“# 3.8 Discretion to pay additional interest not exceeding one percent on deposits of bank’s staff and their exclusive associations

# 3.8.1 A bank may, at its discretion, allow additional interest at a rate not exceeding one per cent per annum over and above the card rate of interest subject to following conditions:

(i) The additional interest is payable only so long as the person continues to be eligible for the same and in case of his ceasing to be so eligible, till the maturity of a term deposit account;

(ii) In the case of employees taken over pursuant to the scheme of amalgamation, the additional interest is allowed only if the interest at the contractual rate together with the additional interest does not exceed the rate, which could have been allowed if such employees were originally employed by the bank.

# 3.8.2 In respect of a savings or a term deposit account opened in the name of:

(a) a member or a retired member of the bank’s staff, either singly or jointly with any member or members of his/her family; or

(b) the spouse of a deceased member or a deceased retired member of the bank’s staff; and

(c) an Association or a fund, members of which are members of the bank’s staff;

The bank should obtain a declaration from the depositor concerned, that the monies deposited or which may, from time to time, be deposited into such account belong to the depositor as stated in clauses (a) to (c) above.

# 3.8.3 For the purposes of sub-paragraph 3.8.2:

(i) “a member of the bank’s staff” means a person employed on a regular basis, whether full-time or part-time, and includes a person recruited on probation or employed on a contract of a specified duration or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but does not include a person employed on casual basis.

iii) “A retired member of the bank’s staff” means an employee retiring whether on superannuation or otherwise as provided in the bank’s Service/Staff Regulations, but does not include an employee retired compulsorily or in consequence of disciplinary action;

(iii) “Family” means and includes the spouse of the member/retired member of the bank’s staff and the children, parents, brothers and sisters of the member/retired member of the bank’s staff, who are dependent on such member/retired member, but does not include legally separated spouse;”

This problem might have been faced by other pensioners also. They are advised to approach the branch for redressal, citing the RBI directions. In case the branch does not respond to their request within a reasonable time , they can approach Sh. Deepak Bhatia, Nodal Officer for grievances of Retirees,  PF & Pension Department H.O. New Delhi (Phone NO. 01128044787)