Reserve Bank of India allows pre-mature deposit withdrawal up to Rs 1 crore

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In a move to provide more flexibility to depositors, the Reserve Bank of India (RBI) has increased the threshold limit of non-callable deposits to Rs 1 crore, as compared to Rs 15 lakh previously.

“On a review, it has been decided that the minimum amount for offering non-callable term deposits (TDs) may be increased from Rupees fifteen lakh to Rupees one crore,” the RBI said.

This means all domestic term deposits accepted from individuals for amounts of Rs 1 crore and below will have a premature withdrawal facility, the RBI said.

Banks are allowed to offer differential rates of interest on fixed deposits based on the non-callability of deposits (i.e., non-availability of premature withdrawal option) in addition to tenor and size of deposits, the RBI said.

Banks typically offer higher interest rates on non-callable deposits.

The callability feature is applicable for Non-Resident (External) Rupee (NRE) Deposits / Ordinary Non-Resident (NRO) Deposits.

In 2019, the RBI redefined bulk deposits as deposits of more than Rs 2 crore from a single customer, which was Rs 1 crore earlier. According to bankers, the move to increase the threshold for callable deposits was to align it with the change in the bulk deposits definition.

These new norms, which are applicable to commercial and co-operative banks, take effect immediately.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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