New Rules Introduced by RBI in Fixed Deposits

From the 1^st of January, the fixed deposit rules have changed for Non-banking Financial Companies and Housing Finance Companies. The circular from RBI came in the month of August. These changes are primarily for improving liquidity, and other factors to help the financial services and the bank account holders.

Here are the six main changes RBI has come up with, which were implemented from the beginning of January 2025.

1. Small Deposits Withdrawal: The first rule that has been amended by RBI regarding fixed deposits is about small deposits that are less than ₹10000. These deposits can be withdrawn by the depositor within three months provided the depositor is willing to leave the interest amount behind. This means if you withdraw your fixed deposits worth less than ₹ 10000 within three months of the deposit date, then you will not get any interest on such deposits.
2. Critical Illness: RBI has also implemented a rule for FD withdrawal concerning critical illness. If you want to withdraw your entire deposit for any critical illness, then the NBFCs or HFCs will be redeeming your 100% funds but you have to again leave the interest when you are withdrawing the amount within three months. Here the deposit has to be individual only.
3. Other Public Deposits: For other public deposits, individual depositors can opt for a 50% withdrawal of the deposit’s principal portion up to ₹ 5 lakh within three months from the date of acceptance of such deposit. In this case, also, there will be no interest amount paid to the deposit. This is for all fixed deposit sums over and above ₹ 10000.
4. Emergent Cost: As per the new rules, the emergent cost will include medical emergencies that result from natural disasters, and calamities declared by the government.
5. Maturity details: Now as per new RBI rules, the NBFCs need to inform the depositor about all maturity details of the FD 14 days prior to maturity. Earlier, it used to be 2 months.
6. Current deposit: The sum mentioned in the above clauses, will also be applicable for current deposit contracts where the depositor doesn’t have the authority to withdraw the money within the first three months of making the deposits.

How it will help the economy?

These changes by RBI will help the economy to have better money circulation. It will also help the depositors to have better access to their funds. Fixed deposits are still India’s favourite savings instrument, but due to the withdrawal related constraints, often new-age investors shy away from the traditional investment option. However, these changes can help in making the fixed deposit more flexible and help in growing the economy further by providing monetary boost.