FD Rules Change October 1: What Indian Savers Need to Know
Source: GNews Fixed Income
Arth Insight · What this means for your wallet
- Your unclaimed FDs will now earn savings account interest post-maturity, preventing loss of earnings.
- You'll receive timely maturity notifications (3 months prior), helping you plan your funds better.
- Matured FD funds will automatically credit to your linked account, ensuring quicker access to your money.
New rules for Fixed Deposits (FDs) will take effect from October 1, impacting how banks handle unclaimed deposits and interest payments. Savers should be aware of these changes to ensure their funds are managed correctly.
- ▸Unclaimed FDs will now earn savings account interest.
- ▸Banks must notify depositors 3 months before FD maturity.
- ▸Matured FD proceeds will be automatically credited to linked accounts.
- ✓Unclaimed FDs will now earn savings account interest.
- ✓Banks must notify depositors 3 months before FD maturity.
- ✓Matured FD proceeds will be automatically credited to linked accounts.
Indian banks will implement new rules for Fixed Deposits (FDs) starting October 1, 2023. These changes primarily concern the handling of unclaimed deposits and the crediting of interest.
Unclaimed Deposits to Earn Interest
Under the new regulations, banks will be required to credit the interest earned on unclaimed fixed deposits to the account of the depositor. This interest will be paid at the rate applicable to the bank's savings account. Previously, unclaimed deposits would often stop earning interest after maturity, leading to a loss for the account holder.
Interest Payment Changes
The Reserve Bank of India (RBI) has mandated that banks must inform FD holders about the maturity of their deposits. This notification should be sent three months before the maturity date. Furthermore, banks will now have to credit the proceeds of maturing fixed deposits, including the principal amount and accrued interest, to the linked savings or current account of the depositor. This aims to streamline the process and prevent delays in fund availability.
Impact on Savers
These rule changes are designed to benefit FD holders by ensuring their money continues to earn interest even after maturity if left unclaimed, and by simplifying the process of accessing funds upon maturity. Savers are advised to review their existing FD accounts and ensure their contact details and linked accounts are up-to-date with their respective banks to benefit from these new provisions.
This article is for informational purposes only and does not constitute investment advice.
Bond / FD returns and credit ratings are indicative and subject to issuer credit risk and interest-rate risk. Verify current terms with the issuer. Some listings may be sponsored. Not investment advice.
Frequently Asked Questions
When do the new Fixed Deposit rules come into effect?
The new Fixed Deposit rules will be effective from October 1, 2023.
What happens to interest on unclaimed FDs after maturity?
After maturity, unclaimed Fixed Deposits will continue to earn interest at the rate applicable to the bank's savings account.
How will I receive my FD money upon maturity?
Banks will now automatically credit the principal amount and accrued interest of maturing FDs to your linked savings or current account.
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