Fixed Deposit
Fixed Deposit

RBI’s New Offering: A Boost for Fixed Deposit Customers

In a move that brings cheer to the countless Fixed Deposit (FD) holders across the nation, the Reserve Bank of India (RBI) has made a notable announcement. Here’s what you need to know:

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  1. A Welcome Change for FD Holders: The RBI, India’s central banking institution, has unveiled a major advantage for FD customers. This change significantly enhances their financial flexibility.
  2. Premature Withdrawal Ceiling Raised: Previously, the premature withdrawal facility for FDs was limited to 15 lakh rupees. But now, the RBI has magnanimously raised this limit, directing all banks to provide premature withdrawal facilities for all FDs up to a whopping 1 crore rupees.
  3. Adjustment in Non-callable Deposits: After a comprehensive review, the RBI has revamped its stand on non-callable term deposits. It has green-lighted an increase in the minimum amount for such deposits from 15 lakhs to 1 crore rupees.
  4. An Instant Implementation: The implications of this directive are vast. It mandates that all domestic FDs procured from individuals, up to 1 crore rupees, should be equipped with a premature withdrawal option. Without delay, this rule has been rolled out to all commercial and cooperative banks in the country.
  5. A Flexible Approach to Interest Rates: Beyond just the deposit’s size and tenure, the RBI is promoting financial innovation. It’s now permitting banks to pitch differential interest rates on FDs, determined by their non-callability features. However, it’s worth noting that these differential rates are specifically tailored for bulk deposits.
  6. Extended Provisions for NRE and NRO Deposits: The RBI’s fresh directive isn’t confined only to domestic FDs. It’s equally applicable to Non-Residential External (NRE) and Ordinary Non-Residential (NRO) deposits. An interesting aspect is the freedom granted to banks. They can choose to offer NRE/NRO term deposits without the premature withdrawal option. But there’s a catch – all such deposits, up to 1 crore rupees, accepted from individuals must invariably offer the premature withdrawal facility.
  7. Revised ‘Bulk Deposit’ Definitions: In a supplementary circular, the RBI has clarified its stance on what constitutes a ‘bulk deposit’. For Regional Rural Banks (RRBs), the definition has now been broadened from the prior 15 lakh rupees to any deposit over 1 crore rupees. Conversely, for commercial and small savings banks, any deposit of 2 crore rupees and above is categorized as a ‘bulk deposit’.

To sum up, the RBI’s recent announcements are not only customer-friendly but also pave the way for greater fluidity in the banking sector. FD customers, both domestic and international, now have more room to maneuver their finances, making the future look even brighter.

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