RBI new rules for FD in NBFC applicable from Jan 2025: Check details

A number of regulations applicable to NBFCs were reviewed and revised regulations were shared in the central bank's latest circular

The Reserve Bank of India (RBI) has announced changes to the regulations governing fixed deposits (FDs) with Non-Banking Financial Companies (NBFCs) and Housing Finance companies (HFCs), set to take effect from January 1, 2025.

These new guidelines are in terms of acceptance of public deposit, maintenance for minimum percentage of liquid assets, full cover for public deposit, repayment of public deposit in order to meet certain expenses of an emergent nature, among others.

The RBI circular said, “Based on a review of the extant regulations applicable to HFCs prescribed vide Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, it has been decided to issue revised regulations as detailed in the Part A of Annex. As part of the exercise, certain regulations applicable to NBFCs have also been reviewed and revised regulations are detailed in Part B of Annex.”

Key Changes 

Small deposits: The central bank said that for small deposits, specifically those not exceeding Rs 10,000 in value, premature withdrawal can be made in full without interest if the depositor requests it before the completion of three months from the date of acceptance.

 

Other deposits: For other public deposits, a maximum of 50 per cent of the principal amount or Rs 5 lakh, whichever is lower, may be prematurely withdrawn by individual depositors upon their request, provided this is done within three months from the deposit's acceptance date, and no interest will be paid on this amount.

 

The remaining balance, along with interest at the agreed rate, will be subject to the existing regulations applicable to public deposits.

 

Critical illness: In cases of critical illness, the RBI has made provisions for depositors to withdraw the entire principal amount prematurely, irrespective of the deposit term, again without interest. 

 

Nomination process: It is currently recommended that NBFCs establish a suitable system for acknowledging the receipt of a properly completed nomination form, including its cancellation, and/or variation. This acknowledgment should be provided to all customers, irrespective of their request for it.

 

Nominee in the passbook: NBFCs are encouraged to adopt the practice of indicating the nomination status on passbooks/receipts by labelling them with "Nomination Registered," and including the Nominee's name on the passbook/receipt, provided the customer consents.

Calamity: Expenses of an urgent nature also cover medical emergencies or costs arising from natural calamities or disasters as officially declared by the government.

 

Existing contracts: The specified amount will also apply to existing deposit contracts where the depositor is prohibited from withdrawing the deposit prematurely within three months.

 

Maturity details: The previous requirement for NBFCs was to notify depositors of maturity details at least two months before the maturity date. However, the RBI's latest directions have reduced this notification period to 14 days.

 

As per the new circular, NBFCs are now obligated to inform depositors of the maturity details at least two weeks before the maturity date.