Non-Callable Fixed Deposits: Benefits and Limitations Explained
August 07, 2024
Fixed Deposits have long been a popular choice for investors looking for stable returns with minimal risk. In 2015, RBI introduced a new type of FD, non-callable Fixed Deposits. These bank deposits are strikingly different from regular or callable Fixed Deposits in terms of interest rates, liquidity, and minimum deposit amount, among others. Let's understand what non-callable FDs are and whether you should book one.
What is Non-Callable Fixed Deposits?
A non-callable fixed deposit is a type of fixed deposit that comes with a pre-determined lock-in period. Unlike callable FDs, non-callable FDs don't allow premature withdrawal of funds. However, such FDs offer higher interest rates compared to regular Fixed Deposits.
For example, Ujjivan's Platina FD is a non-callable FD minimum deposit required is ₹1 crore while the maximum deposit amount should be below ₹3 crore. Other than Indian investors, NRIs (Non-resident Indians) are eligible to open non-callable FDs.
Features and Benefits of Non-Callable Fixed Deposits:
1. Higher Interest Rates
Non-callable fixed deposits offer higher interest rates compared to callable FDs, making them an attractive investment option for those looking to maximise their returns.
2. Short-term Growth
Non-callable FDs generally come with a maturity period ranging from 1 year to 5 years. This allows investors to park and grow their money in a short span of time.
3. Accessibility Beyond Borders
Other than resident Indians, NRIs are also eligible for non-callable fixed deposits. This benefit expands the potential of FD and allows investors across borders to invest in FD and grow their wealth.
4. Multiple Interest Pay-out Options
You can enjoy interest pay-outs monthly, quarterly or at maturity based on your preference. Periodic interest pay-outs could be beneficial for investors looking for a regular source of income.
Disadvantages of Non-Callable Fixed Deposits
1. Lack of Liquidity
Non-callable Fixed Deposits do not allow premature withdrawal before maturity, limiting access to funds during the deposit term. However, there can be certain exceptions where premature withdrawals are allowed. Kindly check with your bank for better clarity.
2. Minimum Deposit Requirement
As per the Reserve Bank of India (RBI) mandate, the minimum deposit requirement for non-callable FDs is capped at ₹1 crore. The high deposit amount requirement makes it difficult for regular investors to open such Fixed Deposits.
3. Auto-Renewal Not Allowed
You don't have the option to auto-renew your FD once it matures. The principal amount along with the interest gets directly credited into your account upon maturity.
Final Thoughts
Non-callable Fixed Deposits offer an excellent investment option for those seeking higher returns and stability without the need for premature access to funds. These FDs provide investors with higher interest rates, predictable income streams, and hassle-free investment options. However, the lack of liquidity and high minimum deposit amount requirement make such FDs not too accessible for retail investors.
Looking to grow your savings? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
To know more about Ujjivan Small Finance Bank Products Visit:"https://www.ujjivansfb.bank.in"
All intellectual property rights, including copyrights, trademarks, and other proprietary rights, pertaining to the content and materials displayed herein, belong
to Ujjivan Small Finance Bank Limited or its licensors. Unauthorised use or misuse of any intellectual property, or other content displayed herein is strictly prohibited and the same is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person’s nationality, residence or otherwise) be contrary to law or registration or would subject Ujjivan Small Finance Bank Limited or its affiliates to any licensing or registration requirements.
