Bank FD Rules : If you also invest in Fixed Deposits (FD), then you should know that the Reserve Bank of India (RBI) has recently changed an important rule related to FDs. The RBI has made certain amendments to the FD regulations, and these new rules have already come into effect. To understand the full details of this update, read this complete news carefully.
If you have an FD or are planning to open one, it’s important to know that the RBI has modified one of the key FD rules. After the RBI increased the repo rate, several government and private banks started raising the interest rates on their FDs as well. Therefore, before making any new FD investment, you should be aware of this change — otherwise, you could end up losing money.
Bank FD Rules : Changes in FD Maturity Rules
The RBI has introduced a major change in the rules regarding Fixed Deposit maturity. Now, if your FD has matured and you do not claim the maturity amount, you will receive a lower rate of interest — equivalent to the interest rate offered on savings accounts.
Typically, banks offer over 5% interest on long-term FDs of 5 to 10 years, whereas savings accounts usually offer around 3% to 4%.
RBI’s Official Notification
According to the RBI, if a Fixed Deposit has matured and the proceeds have not been paid out or claimed by the depositor, the unclaimed amount will earn interest at the rate applicable to savings accounts or the contracted rate of the matured FD, whichever is lower.
This rule applies to all commercial banks, small finance banks, cooperative banks, and local area banks.
How the New Rule Works
Let’s understand this with an example. Suppose you have a 5-year FD that matures today, but you do not withdraw the amount. Two situations may arise:
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If the interest rate on your FD is lower than the savings account rate, you will continue to earn the FD interest rate.
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However, if your FD interest rate is higher than the savings account rate, you will earn only the savings account interest after maturity.
What Was the Old Rule?
Earlier, when your FD matured and you didn’t withdraw or claim the amount, the bank would automatically renew your FD for the same tenure at the prevailing interest rate.
But under the new rule, that will no longer happen. After maturity, if you don’t withdraw the money, you will not receive FD interest on it. Instead, the unclaimed amount will only earn interest equivalent to a savings account.
Important Tip
It is now advisable to withdraw or renew your FD immediately after maturity to avoid losing interest benefits under the new RBI rule.