Many people use Fixed Deposits(FD) to get higher interest rates than the regular savings account. If you are also one of them, then you should know all about the recent changes introduced by Reserve Bank of India (RBI) related to FD.
Recently, both government and non-government banks had increased the rate of interest on FDs. Now, the RBI has changed some rules related to FD. In case you are planning to make any investments in the form of FD, you should be aware of these rules.
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What changes has RBI made related to FD?
According to the recent changes made by RBI in FD rules, if you don’t claim your amount after date of maturity, then you will get less interest on it. In this case, you will not get the interest as per the fixed deposit but that which needs to be received on the savings account.
As of yet, most banks give more than five per cent interest on FDs that are made for 5 to 10 years. The interest rate in savings account for the same period is about 3 to 4 per cent.
In simpler words, if you don’t claim the amount after an FD matures, then the interest will be based on the savings account or on the matured FD (whichever is lower).
Notably, the new rules will apply to deposits made in all commercial banks, co-operative banks, small finance banks and local regional banks.
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What was the old rule related to FD?
According to the old rule, if you don’t withdraw or claim your FD on maturity, the bank would extend it for the same period that you selected at the time of staring the maturity.
For instance, if those who have made an FD that matures in 5 years do not withdraw it due to any reason then you will get the lower rate of interest of either the savings or the FD.
