Banks to Pay 8% Compensation for Delayed Interest Payment on Bonds: RBI

The Reserve Bank of India has asked banks to compensate bond investors for delayed interest payment on Saving/Relief Bonds (government securities) and pay 8% per annum for the financial loss incurred by investors. The proposal is aimed at making banks more efficient in paying interest to the investors.

Earlier, RBI had asked banks to compensate for the delayed interest payment on such bonds at their respective savings bank interest rates, irrespective of the amount. However, now it has decided a uniform rate of 8% for all banks. This move is aimed at avoiding variation in compensation rates across different banks.

RBI also said that investors are paid interest on these government bonds through interest warrants by registered post or the bank directly credits the amount in the investor’s bank account. The banks are going to comply with RBI direction.