The Reserve Bank of India (RBI) has introduced a significant change in the rules governing fixed deposits, allowing premature withdrawals on term deposits up to Rs 1 crore. This decision modifies the earlier guidelines, which permitted banks to offer term deposits without a premature withdrawal option for amounts of Rs 15 lakh and below.
Types of Fixed Deposits:
Banks offer two types of term or fixed deposits – callable and non-callable. In callable deposits, premature withdrawals are permitted, whereas in non-callable deposits, they are not allowed.
Revised Rules:
Under the revised rules, the RBI has increased the minimum amount for offering non-callable fixed deposits to Rs 1 crore. This means that all domestic term deposits accepted from individuals, up to an amount of Rs 1 crore, shall now have the facility for premature withdrawal.
Applicability to NRE and NRO Accounts:
The RBI’s decision also extends to Non-Resident (External) Rupee (NRE) and Ordinary Non-Resident (NRO) deposits. NRE/NRO term deposits without a premature withdrawal option are permitted, provided that all such term deposits accepted from individuals (held singly or jointly) for amounts up to Rs 1 crore also have the option of premature withdrawal.
This change in the rules is expected to provide more flexibility and accessibility for depositors, allowing them to withdraw their fixed deposits up to Rs 1 crore prematurely, as per their financial needs and requirements.
