The Reserve Bank of India (RBI) has recently announced significant changes to the rules governing fixed deposits (FDs) in India. These modifications are designed to provide more flexibility to account holders and ensure more accurate credit information. Here’s what you need to know:
Higher Limits for Premature Withdrawals
RBI’s circular declares that banks must now allow premature withdrawal on all fixed deposits up to Rs 1 crore. Previously, this limit was set at Rs 15 lakh. In essence, this change means that individuals can access their fixed deposits of Rs 1 crore or less before their maturity date.
Customized Interest Rates
Banks are also granted the authority to offer varying interest rates based on the tenure and size of fixed deposits, in accordance with existing norms. However, such flexibility does not extend to fixed deposits without a premature withdrawal option.
These directives are immediately applicable to all commercial banks and cooperative banks. Additionally, the threshold for bulk deposits in regional rural banks (RRBs) has been raised to Rs 1 crore and above from the previous limit of Rs 15 lakh, as per another RBI circular.
Stricter Regulations for Credit Information Companies (CIC)
RBI is also imposing more stringent rules on credit information companies (CICs). In case of delays in updating customers’ credit information, CICs will be required to pay a compensation of Rs 100 per day. Both credit institutions (CIs) and credit information companies have a six-month grace period to implement this new system.
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