27. Rate of interest on premature repayment of public deposits

Where a non-banking financial company, whether at its sole discretion or at the request of the depositor, as the case may be, repays a public deposit after three months from the date of its acceptance, but before its maturity (including premature repayment in the case of death of the depositor), it shall pay interest at the following rates:

After 3 months but before 6 months

No interest

After 6 months but before the date of maturity

The interest payable shall be 2 per cent lower than the interest rate applicable to a public deposit for the period for which the public deposit has run or if no rate has been specified for that period, then 3 per cent lower than the minimum rate at which public deposits are accepted by the non-banking financial company.

Explanation: For the purpose of this paragraph,

1. ‘problem non-banking financial company’ means a non-banking financial company which -

i. has refused or failed to meet within five working days any lawful demand for repayment of the matured public deposits; or

ii. intimates the CLB under section 58AA of the Companies Act, 1956, about its default to a small depositor in repayment of any public deposit or part thereof or any interest thereupon; or

iii. approaches the Bank for withdrawal of the liquid asset securities to meet its deposit obligations; or

iv. approaches the Bank for any relief or relaxation or exemption from the provisions of these Directions or from that of Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 for avoiding default in meeting public deposit or other obligations; or

v. has been identified by the Bank to be a problem non-banking financial company either suomoto or based on the complaints from the depositors about non-repayment of public deposits or on complaints from the company’s lenders about non-payment of dues;

2. ‘tiny deposit’ means the aggregate amount of public deposits not exceeding Rs. 10,000/- standing in the name of the sole or the first named depositor in the same capacity in all the branches of the non-banking financial company.