In a significant development on October 26, 2023, the Reserve Bank of India (RBI) made life easier for depositors by raising the bar for Non-Callable Term Deposits (TDs). This financial change, with immediate effect, empowers all customers to access their Fixed Deposits (FDs) more conveniently. Let’s dive into the details and understand how this decision impacts the average Indian.
- RBI increases the minimum limit for non-callable term deposits from ₹15 lakh to ₹1 crore.
- Customers can now withdraw up to ₹1 crore from their Fixed Deposits (FDs) prematurely.
- The new rule applies to all commercial and cooperative banks.
- This change covers both domestic and Non-Resident (External) Rupee (NRE) and Ordinary Non-Resident (NRO) deposits.
Understanding Non-Callable Term Deposits (TDs)
Non-Callable Term Deposits, often known as TDs, are special savings instruments offered by banks. These deposits come with a unique feature – they don’t allow premature withdrawals until the fixed tenure is complete. In return for this commitment, banks typically offer higher interest rates on non-callable TDs.
Breaking Down the Key Points: What You Need to Know
Here’s a breakdown of the essential elements of this RBI announcement:
1. Minimum Limit Raised
The most significant change is the increase in the minimum deposit limit. Previously, you needed ₹15 lakh to open a non-callable TD, but now, this limit has been raised to a substantial ₹1 crore. This means you can now consider investing a larger amount in a non-callable TD.
2. Premature Withdrawals Allowed
Under the new directive, customers can withdraw money from their Fixed Deposits (FDs) prematurely, and this facility extends to deposits of up to ₹1 crore. This gives you more flexibility and financial control, making it easier to access your funds when needed.
3. Applicability Across Banks
The RBI’s decision applies to all commercial banks and cooperative banks, ensuring that this change benefits a wide range of depositors across the country.
4. Non-Resident Deposits Included
Importantly, these changes apply to both domestic and Non-Resident (External) Rupee (NRE) and Ordinary Non-Resident (NRO) deposits. Non-resident Indians can also benefit from these new regulations, making it more convenient for them to manage their savings in India.
Conclusion: A Boost for Financial Flexibility
In summary, the RBI’s decision to raise the minimum limit for non-callable TDs from ₹15 lakh to ₹1 crore is a welcome move that empowers Indian depositors. It allows for more significant investments and provides greater financial flexibility by allowing premature withdrawals up to ₹1 crore. This change applies to all banks, and it also benefits Non-Resident Indians. So, if you’re looking for a secure and flexible way to save and grow your money, consider exploring non-callable term deposits.