What changed
RBI raised the threshold for mandatory premature withdrawal facility on individual term deposits from ₹15 lakh to ₹1 crore. Banks can no longer offer non-callable deposits for amounts below ₹1 crore. The same rule now applies to NRE and NRO deposits as well.
What it means for you
Banks must update their deposit product offerings to ensure all term deposits up to ₹1 crore from individuals include a premature withdrawal option. This reduces flexibility for banks to offer higher rates on smaller non-callable deposits. Lenders may need to recalibrate their deposit pricing and product structures for retail and NRI customers.
What you must do
- Update system parameters to enforce premature withdrawal facility on all individual term deposits up to ₹1 crore.
- Revise product literature and terms for NRE/NRO deposits to reflect the new threshold.
- Train branch and relationship managers on the revised non-callable deposit rules.
- Review and adjust interest rate differentials for deposits above ₹1 crore to remain competitive.
Who it affects
All commercial banks, All co-operative banks, Retail depositors (individuals), NRI depositors (NRE/NRO accounts)
What is the new minimum amount for non-callable term deposits?
The minimum amount has been increased from ₹15 lakh to ₹1 crore. All term deposits from individuals for ₹1 crore and below must now have a premature withdrawal facility.
Does this circular apply to NRE and NRO deposits?
Yes, the instructions are now applicable to Non-Resident (External) Rupee (NRE) and Ordinary Non-Resident (NRO) deposits as well.
When do these changes take effect?
The instructions came into force with immediate effect from October 26, 2023.