Significant RBI Rule Amendment: Changes in Fixed Deposit Regulations
The Reserve Bank of India has announced a change in the rules for non-callable term deposits.
Significant RBI Rule Amendment: Changes in Fixed Deposit Regulations
Non-Callable Fixed Deposit Rule Amendment 2023: The Reserve Bank of India has announced a change in the rules for non-callable term deposits. The minimum deposit amount for non-callable fixed deposits will be increased from Rs 15 lakh to Rs 1 crore. As a result, all fixed deposits up to Rs 1 crore will now have the option for premature withdrawal.
Banks offer two primary types of term or fixed deposits – callable and non-callable. Callable deposits allow for premature withdrawal, while non-callable deposits do not permit it.
Previously, the RBI allowed banks to offer term deposits (TDs) to individuals without the option for premature withdrawal. However, they had to ensure that all TDs up to Rs 15 lakh had the premature withdrawal feature.
Additionally, banks could set different interest rates on these term deposits based on whether they allowed premature withdrawals or not, along with the deposit's duration and size.
Changes Made to Fixed Deposit
The RBI has made a new rule stating that banks can offer non-callable fixed deposits starting at a minimum of Rs 1 crore. This means that any domestic term deposits from individuals up to Rs 1 crore can be withdrawn prematurely.
This rule also applies to Non-Resident (External) Rupee (NRE) Deposit and Ordinary Non-Resident (NRO) Deposits.
The previous rule allowed banks to offer term deposits without premature withdrawal for amounts up to Rs 15 lakh. Now, this limit has been increased to Rs 1 crore.
The revised rule now states that banks can provide term deposits without a premature withdrawal option, but this change ensures that all term deposits from individuals, whether held singly or jointly, up to Rs 1 crore, will have the option for premature withdrawal.
This also applies to NRE/NRO account holders. For NRE/NRO term deposits, banks can offer them without a premature withdrawal option, but all deposits from individuals, up to Rs 1 crore, will have the choice for premature withdrawal.
Also Read: What Does Tax Liability Mean? Exploring Definitions, Examples, and More
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Krishna Gopal Varshney
An editor at MyitronlinenewsKrishna Gopal Varshney, Founder & CEO of Myitronline Global Services Private Limited at Delhi. A dedicated and tireless Expert Service Provider for the clients seeking tax filing assistance and all other essential requirements associated with Business/Professional establishment. Connect to us and let us give the Best Support to make you a Success. Visit our website for latest Business News and IT Updates.
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