Whether an overdue deposit can be renewed from its date of maturity and if so, whether compounded interest can be allowed?
The bank has discretion to renew or not to renew the overdue deposit standing in the name of a living depositor. If the bank decides to renew the overdue deposit it has to be renewed upto a future date from the date of maturity at a rate prevalent on the date of maturity as applicable to the period for which the deposit is sought to be renewed. If an overdue deposit standing in the name of a living depositor under reinvestment plan or an ordinary fixed deposit is renewed by the bank under reinvestment plan at the specific request of the depositor, payment of compounded interest can be allowed, provided the compounding concept was in vogue at that time.
