RBI FD Rules 2021 – Auto-Renewal FDs discontinued?

Recent RBI FD Rules 2021 creating a lot of confusion among many depositors. Especially it was shared so fastly in social media that from now onward auto-renewal of FDs was discontinued.

The social media forward message states “Circular from RBI, fixed deposits will not be automatically renewed and such matured deposits will get savings bank interest rate. Hence all are requested to note due dates and get the receipt renewed on the due date to avoid loss of interest”.

However, the new RBI FD Rules 2021, will not at all point towards change in any auto-renewal FDs. I am not why the confusion was created.

The RBI Circular dated 2nd July 2021 clearly mentioning what are the changes on the FDs which are matured but not claimed.

RBI FD Rules 2021 – Confusion around auto-renewal FDs

Refer the below image for this new RBI FD Rules 2021.

RBI FD Rules 2021

It is clearly mentioned that if your FDs mature and the proceeds are unpaid, then the new changes will apply to such an amount only.

Let us assume that you booked the FD for a year. It matured and you have not selected the options like deposit the maturity proceeds to your savings account or auto-renewal. In such a situation, after maturity, the amount will remain with the bank. Such an amount is considered as the unclaimed amount. The new changes will be applicable to such an amount.

However, assume that you have opted for FD maturity proceeds to be transferred to your savings account or auto-renewal option, then you no need to bother about such changes.

Assume that you booked short-term FD with SBI for 7-45 days (below Rs.2 Cr), then the current applicable interest rate is 2.9%. Currently, the SBI savings account interest rate is 2.7%. After maturity, if you do not renew or claim the maturity, then after maturity, on such unclaimed FD, SBI Bank will give you a 2.7% interest rate (as it is lower of 2.9% FD rate and 2.7% savings account rate). Earlier by default, it was savings account interest rate.

Assume that after you booked the FD and then interest on savings account increased to 3%, then after maturity, the bank will give you the 2.9% interest on such unclaimed amount (as FD rate of 2.9% is lower than the savings account rate of 3%).

Hence, there is no link between this new rule to auto-renewal of FD. You can still continue to opt for either FD maturity proceeds to be credited to your savings account or auto-renew your FDs as usual.

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16 thoughts on “RBI FD Rules 2021 – Auto-Renewal FDs discontinued?”

  1. sir my grandfather had made a fd with the The central bank of india on July 2007 with 18 months maturity i.e on January 2009 and bank had opened fd with standing instruction to transfer it in account, but he has no account with central bank at that time
    and we don’t know about this fd till 2022
    when we came to know it is already transferred to DEAF and we claimed & we get only principal amount + interest till January 2009 + interest from rbi from the day when it is transfered to deaf till it is claimed

    what should i do. is the interest amount is correct ?

  2. If any person make fd for Rs 25000/-for three year in 2000 in manual way during computerization mostly banks hired outsourced services for migration of record from manual to computerization and during that process owner of fdr changed and in 2015 paid to new owner proceeds of fdr. In 2022 Actual owner file claim with bank. After scrutinizing the record able to recover amount paid in 2015 in this case if actual owner claim TDR interest from 2015 to 2022 what is legal position of bank. As the payee of proceeds in 2015 denied to pay interest that it was bank mistakes.
    Please guide?

  3. Hello sir
    I want to ask a query which is related to Fixed deposit. If FD is created 27th Aug 2019 and FD is withdrawal 7th Aug 2021 then FD will be premature or matured ?
    Please reply me and resolve my query

    1. Dear Vipin,
      Even though RBI did not specify the effective date, I feel the notification date is an effective date (2nd July 2021).

  4. Hello sir ,Ur posts are really helpful .I wish to know ,I have iifl demat and trading a c,now for mutual fund. Sips ,is a separate account like mfu or zeroadha needed and for govt securities ,bonds and arbitrage funds also I can buy thru mfu a c ,is it .plz clarify ,if separate ACS needed for different kinds of investmens .

    1. Dear Vijaya,
      For investing in Mutual Funds, you no need to open Demat Account. Using any platform of your choice, you can invest. But don’t open Demat Account just for the sake of investing in mutual funds.

  5. Hello sir
    This rule is only applicable to FD or other term deposits like RD, short term deposits and reinvestment plan deposits.

  6. Hello sir my name md irshad my address at chhoti ballia upar tola ballia begusarai bihar india my pin code 851211. Help please my find cash 10000 payment please note let sir amergency payment please note let sir amergency payment please

    1. Dear Irshad,
      Do you know the risk you are posing yourself by sharing your bank details on such public platforms? I deleted those details. Regarding the cash payment, I am not sure why you are asking to me. I am neither authorized bank authority nor unaware of what is the issue. Hence, better to contact the concerned bank.

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