FD Rules Changed: If you save money in fixed deposits, you’ll have to be a little more careful today. Because the Reserve Bank of India (RBI) has made some adjustments to the FD rules that you should be informed of, or you risk losing your money.
FD maturity rules have been changed.
Actually, the RBI has changed the rules for Fixed Deposits (FDs) so that if you do not claim the money after the maturity date, you would receive less interest. This interest will be the same as the savings account interest. Currently, banks often pay more than 5% interest on FDs with a 5- to 10-year tenor. Savings account interest rates are typically about 3% to 4%.
This order was issued by the RBI.
If a fixed deposit matures without being paid or claimed, the interest rate would be the same as a savings account or fixed interest on the maturity FD, according to a circular published by the RBI. The rate will be offered, whichever is lowest. All commercial banks, small financing banks, cooperative banks, and local regional banks will be subject to the new laws.
Understand this in such a way that, if you have a 5-year FD that has matured today but you are not withdrawing the money, you will find yourself in one of two scenarios. If the interest on your FD is less than the rate on your bank’s savings account, you will continue to receive the FD interest. If the interest earned on the FD is greater than the interest earned on the savings account, you will get the savings account interest after the FD matures.
This used to be the rule.
Previously, if you did not withdraw or claim your FD when it matured, the bank would extend it for the same term for which you had made the FD. But that is no longer the case. However, if the money is not withdrawn by the maturity date, the FD interest would be forfeited. As a result, it is preferable to withdraw funds as soon as possible following maturity.