Non-callable Fixed Deposit Rule Change 2023: The Reserve Bank of India has decided to increase the minimum amount for offering non-callable term deposits from Rs 15 lakh to Rs 1 crore. What this means is that all fixed deposits of up to Rs 1 crore shall have a premature withdrawal facility.
Banks provide two types of term or fixed deposits – Callable and non-callable. In callable deposits, premature withdrawal is allowed while in non-callable deposits, it is not allowed.
The RBI had earlier permitted banks to offer domestic term deposits (TDs) without a premature withdrawal option, provided that all TDs accepted from individuals for an amount of Rs 15 lakh and below shall have premature-withdrawal-facility.
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Further, the banks were also permitted to offer differential rates on interest on term deposits based on the non-callability of deposits (i.e., non-availability of premature withdrawal option) in addition to the tenor and size of deposits.
What has changed
The RBI has decided to increase the minimum amount for offering non-callable fixed deposits to Rs 1 crore.
“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,” the RBI said in a notification dated October 26, 2023.
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“These instructions shall also be applicable for Non-Resident (External) Rupee (NRE) Deposit / Ordinary Non-Resident (NRO) Deposits,” it added.
The previous rule said: “Banks shall have the freedom to offer term deposits without premature withdrawal option. Provided that all term deposits accepted from individuals (held singly or jointly) for amount of Rupees fifteen lakh and below shall have premature-withdrawal-facility.”
The above has now been revised to: “Banks shall have the freedom to offer term deposits without premature withdrawal option. Provided that all term deposits accepted from individuals (held singly or jointly) for amount of Rupees one crore and below shall have premature-withdrawal-facility.”
The premature withdrawal option on deposits up to Rs 1 crore will also be available to NRE/NRO account holders.
“Banks shall have the freedom to offer NRE / NRO term deposits without premature withdrawal option, provided that all NRE / NRO term deposits accepted from individuals (held singly or jointly) for amount of Rupees one crore and below shall have premature-withdrawal-facility,” the RBI said.
