Premature withdrawal to be allowed on all bank FDs of up to Rs 1 crore: RBI hikes limit of non-callable FDs
The Reserve Bank of India (RBI) has increased the minimum amount for offering non-callable term deposits to Rs 1 crore from the existing Rs 15 lakh for banks. So, all customers will get an option to prematurely withdraw money from fixed deposits (FDs) below Rs 1 crore.In a notification released on October 26, 2023, the central bank said, "In terms of these instructions, banks have been permitted to offer domestic term deposits (TDs) without premature withdrawal option, provided that all TDs accepted from individuals for an amount of Rupees fifteen lakh and below shall have premature withdrawal-facility. Further, the banks have also been permitted to offer differential rate on interest on TDs based on non-callability of deposits (i.e., non-availability of premature withdrawal option) in addition to tenor and size of deposits."
"On a review, it has been decided that (i) 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 and (ii) these instructions shall also be applicable for Non-Resident (External) Rupee (NRE) Deposit / Ordinary Non-Resident (NRO) Deposits," it added.
Non-callable fixed deposits refer to a category of fixed deposits (FDs) that offer no premature withdrawal option before the completion of tenure. Once you invest in these deposits, your money will be locked for the entire tenure. You can only access the money once your FD matures.
This circular is applicable to all commercial banks and co-operative banks, the central bank said October 26, 2023.
These instructions shall come into force with immediate effect, RBI said.
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This story originally appeared on: India Times - Author:Faqs of Insurances
