Delhi High Court on September 23, 2026 directed a bank to reverse a steep cut in the interest rate on a ₹5.89‑crore fixed deposit, restoring the original 7.75% rate that had been reduced to 3.5% on January 30, 2018. The order followed a dispute that began in 2008, when the court had instructed the bank to lock the amount in a fixed deposit at the maximum permissible rate.
The deposit, created under a prior court mandate, was originally earning 7.75%, 8.25% and 7.75% across different terms. The bank’s justification hinged on RBI circular clauses 3.3 and 3.4, claiming it could set rates and that unrenewed deposits should earn the prevailing savings rate. The court found the bank failed to prove that all comparable deposits were treated equally and that the reduction applied uniformly.
"Banks cannot discriminate between deposits accepted on the same date, whether at the same branch or different branches," the judge said, echoing RBI guidance that mandates uniformity. Siddartha Karnani, Partner at King Stubb and Kasiva, told ET that the 2021 RBI amendment now requires overdue deposits to earn either the savings rate or the originally agreed rate, whichever is lower.
The court’s decision places the bank under a 30‑day deadline to pay the depositor the difference between the 7.75% and 3.5% rates accrued since the cut. The bank has been notified to comply and may appeal, but any appeal would not alter the immediate obligation to restore the interest.
For the depositor, the ruling means a significant recovery of earnings that had been withheld for years, a rare vindication in a sector where banks often adjust rates without notice. The case underscores the judiciary’s willingness to enforce RBI‑mandated fairness in deposit interest calculations.
The bank has not yet announced a response. Meanwhile, the court’s order is expected to set a precedent for similar disputes across India’s banking landscape.