FD Withdrawal Rules Amended: You Can Now Prematurely Withdraw Upto Rs 1 Cr

The Reserve Bank of India released a circular on 26th October 2023 stating that all fixed deposits made upto Rs 1 crore can be prematurely withdrawn. This benefit will be available for NRE/NRO term deposits as well.

What does this mean? You can withdraw all your fixed deposits up to Rs 1 crore. Before the release of this circular, the withdrawal limit was upto Rs 15 lakh. This means all FDs upto Rs 15 lakh were callable, and the bifurcation of callable vs non-callable happened for deposits above 15 lakhs.

It looks like we will be using the terms callable and non-callable deposit quite a few times in this article, so let’s understand what the terms mean.

Callable vs Non- Callable Deposit

A callable fixed deposit is where the FD amount can be withdrawn wholly or partially before maturity. All fixed deposits that allow premature withdrawal are called callable fixed deposits.

A non-callable fixed deposit is a scheme where you cannot withdraw the invested amount before maturity. Your investment remains locked in for your chosen tenure. Banks offer higher rates on non-callable FDs to discourage premature withdrawals.

Difference Between Callable and Non-Callable Deposit: A Table

What Does This Rule Mean for You?

This rule change will allow you to withdraw fixed deposits prematurely, upto Rs 1 crore. You can now benefit from rising interest rates by closing your FDs prematurely and reinvesting at higher rates. However, banks may no longer offer the extra interest they used to offer on FDs of less than Rs 1 crore.

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