FD was RBI modifies the guidelines for the FD withdrawal limit; be aware of the new regulations

 FD was RBI modifies the guidelines for the FD withdrawal limit; be aware of the new regulations

Because fixed deposits guarantee returns, they are seen as a safe investment option in the nation. Investors will now profit from a modification that the RBI has made in a related regulation.

An earlier regulation pertaining to early withdrawals from bank fixed deposits has been modified by the Reserve Bank of India (RBI). Banks now allow early withdrawals on savings accounts up to Rs 15 lakh. With immediate effect, the Central Bank has now raised this sum to Rs 1 crore. This implies that investors will now be able to withdraw their investments if money is required and the FD may be broken before maturity.

Two varieties of FD

There are two varieties of FDs available from banks: callable and non-callable. If an investment is non-callable, it cannot be withdrawn before its maturity date. However, callable FD may be used for this. The account holder of a callable FD may withdraw all or part of the balance prior to maturity. While there is a penalty associated with banks for early withdrawals, callable FDs do not have a lock-in period. However, since the money is trapped in non-callable funds, they earn more interest than regular funds.

What altered?

The minimum amount that may be prematurely withdrawn for non-callable FDs has been raised from Rs 15 lakh to Rs 1 crore, or Rs 1 crore and less, according to a circular issued by the RBI on October 26, 2023. This amount of domestic term deposits will all have the option of early withdrawal. The circular has said that NRE and NRO deposits would be subject to these guidelines as well. All commercial banks and cooperative banks are covered by this circular.

"Banks will have the freedom to offer NRE/NRO fixed deposits without the option for premature withdrawal," states the circular. However, any NRE/NRO fixed deposits that are taken from people for sums of less than Rs 1 crore must provide the option for early withdrawal.

Banks are now providing investors with competitive interest rates on FDs after the RBI's ongoing rate increase in May 2022. Governor of the RBI Shaktikanta Das had said earlier this month that further increases to lending and deposit rates are still possible.