RBI FD Rules New Explained Protect Your Investments Before January 2025

RBI FD Rules – Explained Protect Your Investments Before January 2025

The Reserve Bank of India (RBI) has announced changes to the regulations governing fixed deposits (FDs) with Non-Banking Financial Companies (NBFCs) and Housing Finance companies (HFCs), set to take effect from January 1, 2025. These new guidelines are in terms of acceptance of public deposit, maintenance for minimum percentage of liquid assets, full cover for public deposit, repayment of public deposit in order to meet certain expenses of an emergent nature, among others.

RBI FD Rules: What Do New RBI FD Rules Mean For You? Find Out Now

The RBI circular said, “Based on a review of the extant regulations applicable to HFCs prescribed vide Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, it has been decided to issue revised regulations as detailed in the Part A of Annex. As part of the exercise, certain regulations applicable to NBFCs have also been reviewed and revised regulations are detailed in Part B of Annex.”

Key Changes – RBI FD Rules

Small deposits – RBI FD Rules: The central bank said that for small deposits, specifically those not exceeding Rs 10,000 in value, premature withdrawal can be made in full without interest if the depositor requests it before the completion of three months from the date of acceptance.

Other deposits: For other public deposits, a maximum of 50 per cent of the principal amount or Rs 5 lakh, whichever is lower, may be prematurely withdrawn by individual depositors upon their request, provided this is done within three months from the deposit’s acceptance date, and no interest will be paid on this amount. The remaining balance, along with interest at the agreed rate, will be subject to the existing regulations applicable to public deposits.

Critical illness: In cases of critical illness, the RBI has made provisions for depositors to withdraw the entire principal amount prematurely, irrespective of the deposit term, again without interest.

Nomination process: It is currently recommended that NBFCs establish a suitable system for acknowledging the receipt of a properly completed nomination form, including its cancellation, and/or variation. This acknowledgment should be provided to all customers, irrespective of their request for it.

Nominee in the passbook: NBFCs are encouraged to adopt the practice of indicating the nomination status on passbooks/receipts by labelling them with “Nomination Registered,” and including the Nominee’s name on the passbook/receipt, provided the customer consents.

Calamity: Expenses of an urgent nature also cover medical emergencies or costs arising from natural calamities or disasters as officially declared by the government.

Existing contracts – RBI FD Rules: The specified amount will also apply to existing deposit contracts where the depositor is prohibited from withdrawing the deposit prematurely within three months.

Maturity details – RBI FD Rules: The previous requirement for NBFCs was to notify depositors of maturity details at least two months before the maturity date. However, the RBI’s latest directions have reduced this notification period to 14 days. As per the new circular, NBFCs are now obligated to inform depositors of the maturity details at least two weeks before the maturity date.

FAQ’s – RBI FD Rules

Q1: What are the new rules for premature withdrawal of small deposits?
A1: For small deposits not exceeding Rs 10,000, premature withdrawal can be made in full without interest if requested before completing three months from the deposit date.

Q2: What are the conditions for withdrawing part of a public deposit prematurely?
A2: For other public deposits, up to 50% of the principal amount or Rs 5 lakh (whichever is lower) can be withdrawn prematurely within three months from the deposit date without interest. The remaining balance will continue to accrue interest as per existing regulations.

Q3: Can depositors withdraw their entire deposit amount in case of critical illness?
A3: Yes, depositors can withdraw the entire principal amount prematurely in cases of critical illness, regardless of the deposit term, but no interest will be paid.

Q4: What changes have been made regarding the nomination process for NBFC deposits?
A4: NBFCs are advised to acknowledge the receipt of properly completed nomination forms, including cancellations or variations, and provide this acknowledgment to all customers.

Q5: How has the notification period for deposit maturity details changed?
A5: The notification period for maturity details has been reduced from two months to 14 days before the maturity date, as per the RBI’s latest directions.