RBI increases premature deposit withdrawal limit to ₹1 cr

The Reserve Bank of India (RBI), in a series of decisions, has decided to increase the threshold limit of non-callable deposits, and has directed asked credit information companies to introduce a compensation framework for delayed updation or rectification of credit information. 

Under the latest decision, the minimum amount for offering non-callable TDs may be increased from ₹15 lakh to ₹1 crore. 

This means all domestic term deposits accepted from individuals for amount of ₹1 crore and below will have premature-withdrawal-facility, the RBI says. The move is aimed at providing more flexibility to depositors.

These instructions will also be applicable for Non-Resident (External) Rupee (NRE) Deposit or Ordinary Non-Resident (NRO) Deposits.

Under the existing provisions, banks have the freedom to offer term deposits without premature withdrawal option, provided all term deposits accepted from individuals for ₹15 lakh and below have premature-withdrawal-facility.

The amended rules will now allow the threshold limit of non-callable deposits to be increased ₹1 crore.

To strengthen customer service rendered by Credit Information Companies and Credit Institutions, the RBI has asked them to introduce a compensation framework for strengthening and improving the efficacy of the grievance redress mechanism and customer service.

To do this, the RBI says CICs will send alerts through SMS/email to customers when their Credit Information Report (CIR) is accessed by the Specified Users (SUs) and the alerts will be sent only when the CIR enquiry reflects in the CIR of the customer. CIs will also send alerts regarding default or Days Past Due (DPD) in existing credit facilities.

For delayed updation or rectification of credit information, the RBI has said complainants will be entitled to a compensation of ₹100 per calendar day in case their complaint is not resolved within a period of thirty calendar days from the date of the initial filing of the complaint.

"A CI shall pay compensation to the complainant if the CI has failed to send updated credit information to the CICs by making an appropriate correction or addition or otherwise within twenty-one (21) calendar days of being informed by the complainant or a CIC," says an RBI notification.

The RBI also reviewed instructions on Bulk Deposits for Regional Rural Banks (RRBs). So far, bulk deposits meant single rupee term deposits of ₹2 crore and above for Scheduled Commercial Banks, excluding Regional Rural Banks, and single rupee term deposits of ₹15 lakh and above for RRBs.

On a review, the RBI has decided to enhance the bulk deposit limit for Regional Rural Banks. Accordingly, “Bulk Deposit” for Regional Rural Banks will now mean "Single Rupee term deposits of ₹1 crore and above".

Additionally, the RBI has also invited comments on draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services. "Comments/Feedback, if any, may be sent by email with the subject line “Comments on draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services”, by November 28, 2023," says the central bank.

It says the draft directions have been prepared by incorporating, updating, and where required, harmonising the extant directions to enable regulated entities to have all current instructions on outsourcing of financial services at one place for reference.