The Buyt Desk
You have to ensure that if your bank fixed deposit is maturing then you must inform your bank as to what would be the next step. Whether you want to continue further by extending the term of your fixed deposit or time deposit or you want to withdraw your money? The Reserve Bank of India has introduced new rules for fixed deposits and term deposits. As per RBI’s circular when your fixed deposit matures and the proceeds remain unclaimed, post-maturity the banks will credit the interest applicable to the savings bank account. The higher interest of FD/TD will be rolled back immediately after maturity.
RBI’s Circular
RBI stated- “It has been decided that if a Term Deposit (TD) matures and proceeds are unpaid, the amount left unclaimed with the bank shall attract a rate of interest as applicable to a savings account or the contracted rate of interest on the matured TD, whichever is lower.” The new rule will be applicable to all types of banks commercial banks, small finance banks, co-operative banks and regional banks too.
What is a Fixed Deposit?
You invest in a fixed deposit for a fixed period of time. It could vary from 6 months to 1 year, 3 years or a 5-year tenure. The deposit will give you a fixed interest for the chosen tenure.RBI’s new rule will apply to all kinds of FDs such as cumulative, recurring, reinvested deposit and cash certificates as well. Even post office FD/TD will have to adhere to this new rule. Though this rule does not apply to tax saver FDs which have a tenure of 5 years.
What was the Old Rule?
The unclaimed deposits with the bank have been increasing every year and according to news reports, it stands at Rs 18,380 Crore in FY19. As per the old rules if the account holder did not renew his/her FD upon its maturity, in the event of the completion of the maturity (term) of the fixed deposit the bank used to renew it automatically for the earlier period. Due to this the bank customers also used to rest assured. But, on July 2, RBI issued a circular to change this rule. Now the customers will have to reach the bank and convey the future course of action regarding their FD/TD.
Bad News for Senior Citizen
This order of the RBI is a big blow for senior citizens. Fixed Deposit and Time deposit are their favourite tools of parking their fund. Due to COVID-19 lockdown and restriction, they are not stepping out of their homes. They were rest assured that even if they were unable to extend their FD it used to get an automatic extension. But not anymore.
