Banks to allow premature withdrawal of FDs up to Rs 1cr

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The Reserve Bank of India (RBI) on Thursday said that banks will have to provide premature withdrawal facility on all fixed deposits up to Rs 1 crore. At present this limit is up to Rs 15 lakh.

The Reserve Bank said in a circular that after a review, it has been decided that the minimum amount for non-withdrawable fixed deposits may be increased from Rs 15 lakh to Rs 1 crore.

This means that there should be facility for premature withdrawal on fixed deposits of Rs 1 crore and less by individuals.

Along with this, banks have also been given the option to offer different interest rates depending on the tenure and size of the fixed deposit as per the existing norms and there is no premature withdrawal option.

“Banks shall have the freedom to offer NRE/ NRO term deposits without premature withdrawal option, provided that all NRE/ NRO term deposits accepted from individuals (held singly or jointly) for amount of Rs 1 crore and below shall have premature-withdrawal-facility,” it said.

These instructions have come into effect with immediate effect on all commercial banks and co-operative banks.

The ‘bulk deposit’ limit for regional rural banks (RRBs) has been increased to Rs 1 crore and above from the existing Rs 15 lakh, RBI said in another circular.