RBI's New Guidelines for NBFC and HFC Fixed Deposits: Key Changes from 1 January 2025
MAS Team | 31 December 2024
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The Reserve Bank of India (RBI) has introduced new regulatory guidelines for Fixed Deposits (FDs) managed by Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs), set to take effect from 01 January 2025.
These regulations, outlined in an RBI circular dated 12 August 2024, establish a revised framework for both HFCs and NBFCs, particularly focusing on public deposit management and emergency withdrawal provisions.
Key Changes in Public Deposit Management:
Early Withdrawal Provisions:
- Small deposits under Rs10,000 can be withdrawn within three months of acceptance without interest
- Individual depositors can withdraw up to 50% of principal or Rs5 lakh (whichever is lower) before the three-month period, interest-free
- 100% principal withdrawal permitted in cases of critical illness before the three-month period, without interest
Emergency Considerations:
- NBFCs can now utilize public deposits for emergency expenses, including medical emergencies from natural disasters or government-declared calamities
- These provisions will apply to existing deposit contracts, even where early withdrawal wasn't previously permitted
Administrative Changes:
- Maturity notification period reduced from two months to 14 days
- Enhanced nomination process requiring NBFCs to verify and acknowledge nomination forms
- Recommendation to include "Nomination Registered" and nominee's name in passbooks with customer consent
NBFC Fixed Deposits in 2024:
The guidelines acknowledge NBFCs' higher interest rates compared to traditional banks, attributed to their inherent 'credit risk'. Fixed Deposits remain a popular investment choice in India, offering guaranteed returns over specified periods.
The new framework stems from a comprehensive review of existing regulations, particularly the Master Direction for NBFCs and HFCs from 2021. This update aims to streamline deposit management while enhancing depositor protection through clearer withdrawal and nomination procedures.
These changes represent RBI's ongoing efforts to strengthen the non-banking financial sector while ensuring adequate customer protection and operational flexibility for NBFCs and HFCs.
Dear Investor,
In case of any grievance / complaint :
In case of any grievance / complaint :
- Please contact Compliance Officer Shraddha Mhatre at [email protected] and Phone No. - 91-22-35131664.
- You may also approach CEO Debashis Basu at email- id [email protected] and Phone No. - 91-22-35131664.
