The central bank had earlier allowed banks to offer domestic term deposits (TDs) without a premature withdrawal option.
Fixed Deposit New Rules: Here comes a big update for fixed deposit account holders. The Reserve Bank of India said it will increase the minimum amount for offering non-callable term deposits from Rs 15 lakh to Rs 1 crore. It means all fixed deposits of up to Rs 1 crore will have the facility for premature withdrawal.
Check RBI’s Latest Notification
In a notification issued on October 26, the RBI said that the minimum amount for offering non-callable TDs may be increased from Rupees fifteen lakh to Rupees one crore all domestic term deposits accepted from individuals for amount of Rupees one crore and below shall have premature-withdrawal-facility.
The FD account holders must note that the banks in the country provide two types of term or fixed deposits – Callable and non-callable. In callable deposits, premature withdrawal is allowed and in non-callable deposits, it is not allowed.
The central bank had earlier allowed banks to offer domestic term deposits (TDs) without a premature withdrawal option with the condition that all TDs accepted from individuals for an amount of Rs 15 lakh and below shall have premature-withdrawal-facility.
Moreover, banks were allowed to offer differential rates on interest on term deposits based on the non-callability of deposits.
What Rules Changed Now?
Now, the RBI decided to increase the minimum amount for offering non-callable fixed deposits to Rs 1 crore.
“The minimum amount for offering non-callable TDs may be increased from Rupees fifteen lakh to Rupees one crore i.e., all domestic term deposits accepted from individuals for amount of Rupees one crore and below shall have premature-withdrawal-facility,” the RBI said in a notification.
“These instructions shall also be applicable for Non-Resident (External) Rupee (NRE) Deposit / Ordinary Non-Resident (NRO) Deposits,” it added.
However, the earlier RBI guideline stated that the banks will have the freedom to offer term deposits without premature withdrawal option. “Provided that all term deposits accepted from individuals (held singly or jointly) for amount of Rupees fifteen lakh and below shall have premature-withdrawal-facility.”
This rule has now been revised to: “Banks shall have the freedom to offer term deposits without premature withdrawal option. Provided that all term deposits accepted from individuals (held singly or jointly) for amount of Rupees one crore and below shall have premature-withdrawal-facility.”
The premature withdrawal option on deposits up to Rs 1 crore will also be available to NRE/NRO account holders.
“Banks shall have the freedom to offer NRE / NRO term deposits without premature withdrawal option, provided that all NRE / NRO term deposits accepted from individuals (held singly or jointly) for amount of Rupees one crore and below shall have premature-withdrawal-facility,” the RBI said.