There is going to be a big change in many rules from January 1. Many banking related rules, which are related to common people, are going to change. One such rule is related to Fixed Deposit. RBI has issued a new guideline regarding fixed deposits, which should be known to every person who is thinking about investing or has invested in FD.
The updated regulatory framework for housing finance companies (HFCs) and non-banking finance companies (NBFCs) will be implemented by the Reserve Bank of India from January 1, 2025. These revised guidelines were issued in August. This includes things like approval and repayment of public deposits, nomination, emergency expenses, notifying depositors about deposits.
Which rules are changing?
- As per the guidelines prescribed by the Reserve Bank of India (RBI), depositors can withdraw the entire amount of small deposits (up to Rs 10,000) within three months of deposit without any interest.
- For larger deposits, partial withdrawal up to 50% of the principal amount or Rs 5 lakh (whichever is lower) can be done without interest within three months.
- In cases of critical illness, depositors are permitted to prematurely withdraw the entire principal amount irrespective of the period of deposit, but no interest is paid. Additionally, Non-Banking Financial Companies (NBFCs) are now required to communicate maturity details to depositors at least two weeks before the maturity period for more timely updated information.
What else will be the update?
Nomination Update: NBFCs have been advised to put in place appropriate systems to acknowledge receipt of properly completed nomination forms and to acknowledge cancellation or variation of nomination. It is important to provide this acknowledgment to all customers, whether requested or not.
Mention of nominee in passbook: NBFCs should consider recording nomination details on passbooks or receipts. This should include writing “Nomination Registered” with the customers consent and the name of the nominee.
Withdrawal Provisions: According to RBI, individual depositors holding public deposits are allowed to request premature withdrawal within three months from the date of deposit. In such cases, a maximum of 50% of the principal amount or Rs 5 lakh (whichever is less) can be withdrawn without any interest. The remaining amount will continue to receive interest at the agreed rate and standard regulations for public deposits will be followed.
In case of serious illness: In cases of critical illness, depositors have the option to request complete withdrawal of their original deposit amount before the time of three months from the date of deposit. This withdrawal is issued without any interest. It is important to note that this provision also applies to existing deposit contracts which previously did not allow premature withdrawal rights within the initial three months.
Deposit maturity information: Earlier NBFCs were required to inform depositors about the maturity date of their deposits at least two months in advance. However, now this notification period has been revised to 14 days. NBFCs are now required to inform depositors about the maturity date at least 14 days before the maturity of the deposit.