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Interest Rates on Advances
DBOD No. Dir. BC. 72/13.03.00/2001-02
dated 9th March 2002
In exercise of the powers conferred by
Sections 21 and 35A of the Banking Regulation Act, 1949, and in partial
modification of paragraph 1 of its Directive DBOD No. Dir. BC.
106/13.03.00/2000-01 dated April 19, 2001, the Reserve Bank of India, being
satisfied that it is necessary and expedient in the public interest to do so,
hereby directs that:
i. With effect
from April 1, 2002, banks shall move over to charging of interest on
loans/advances at monthly rests. However, interest on monthly
rests shall not be applicable to agricultural advances and banks shall
continue to follow the existing practice of charging/compounding of interest on
agricultural advances linked to crop seasons.
ii.
Application of interest on monthly rests shall be restricted to Cash
Credit and Overdraft accounts only.
iii.
In the case of loans of longer/fixed tenor, banks shall move over to
application of interest at monthly rests at the time of review or renewal
of such loan accounts.
iv. Interest at monthly
rests shall be applied in case of all new term loans and other loans of
longer/fixed tenor.
2. All other
terms and conditions relating to interest rates on advances as contained in
directives, issued from time to time, shall remain unaffected.
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