What is a Non-callable Deposit?

A non-callable deposit is a type of Fixed Deposit (FD) with a mandatory lock-in period. The RBI introduced this type of FD to improve the liability and asset management of banks. A non-callable FD requires a higher minimum investment amount and generates higher returns than callable fixed deposits. 

 

But if you want enhanced liquidity, consider investing in callable FDs. They allow you to partially or wholly withdraw funds before the maturity date. 

Features and Benefits of Non-callable Fixed Deposits

If you don’t foresee a need for funds soon, non-callable FDs may be the right choice. Here are some of its key attributes:

  • Tax Benefits

Opt for a 5-year tax-saving FD to claim deductions of up to ₹1.5 Lakhs u/s 80C of the Income Tax Act, 1961. 

  • Loan Against FD

Certain issuers offer loans against your non-callable term deposit. This could help you with some liquidity to address urgent financial obligations.

  • Higher Interest Rates

Most FD issuers offer these FDs at higher interest rates than callable FDs.

  • Maturity Period

You can choose a tenor that aligns with your objectives and accumulate profits over time. 

  • Financial Discipline

These FDs encourage long-term saving habits since the deposit is locked until maturity. 

  • Guaranteed Returns

Since you cannot withdraw funds before maturity, you can expect the full maturity amount with interest as FD rates are guaranteed. 

  • Compounded Returns

These FDs could be a secure investment avenue for investors looking to benefit from compounding interest over a longer period. 

Non-callable Fixed Deposit Interest Rates

Your FD returns depend on the interest rates set by the issuer. The longer you stay invested, the higher your returns will be. Here are the interest rates offered by a few leading issuers for non-callable FDs.

FD Issuer 

Tenor

Interest Rate 

AU Small Finance Bank 

1 Year 1 Day - 3 Years

Up to 8.10%  

Ujjivan Small Finance Bank

1 Year - 5 Years

Up to 8.70% 

HDFC Bank

89 Days - 10 Years 

Up to 7.85%

ICICI Bank

7 Days - 10 Years 

Up to 7.70% 

Bank of Baroda

1 Year - 10 Years 

Up to 7.90%

Disclaimer: The interest rates are subject to change at the discretion of the issuer.

How Non-callable Fixed Deposits Work

Knowing how these deposits work could help you make an informed decision. Compare interest rates across issuers before choosing an FD. Use an FD calculator to compute estimates and finalise the right terms. 

 

Here are some essential facts about a non-callable term deposit that you need to know:

  • The invested amount locked in for a specific duration

  • The interest earned on the deposit is based on a predetermined interest rate

  • The funds cannot be withdrawn before the tenor ends  

  • Special exceptions for withdrawal include bankruptcy, business liquidation, a court order, or the depositor’s demise 

  • The principal amount and interest earned are paid at maturity

Who Should Consider Investing in Non-callable Fixed Deposits

You can invest in this avenue if you meet the issuer’s eligibility criteria and submit the required documents. Opting for this type of fixed deposit is ideal when you:

  • Have Surplus Funds

These FDs could be an ideal investment choice if you have surplus funds which you do not need soon. Investing a lump sum amount may fetch you better interest. This is better than keeping your funds idle in a savings account. 

  • Have Investment Goals For the Future

Invest in these FDs if you want to build a corpus to reach specific investment goals. This could be to save for a down payment on a house or purchase a car. 

Depending on the type of goal, non-callable deposits could help you achieve it. These FDs could be ideal if you want higher interest rates to maximise your returns.

Eligibility to Invest in Non-callable Deposits

Before booking a non-callable FD, you need to meet certain eligibility requirements. While these criteria may differ among issuers, here are some common conditions:  

  • You must be at least 18 years old

  • You can apply if you are resident or non-resident Indian

 

The following entities may also be allowed to book a non-callable FD:

  • Hindu Undivided Families (HUFs)

  • Trusts

  • Associations 

  • Partnership or proprietorship firms, etc.

 

Check the exact requirements on the bank or NBFC’s official website or visit their nearest branch. 

Things to Consider Before Investing in a Non-callable FD

Here are some essential parameters that you could consider before booking a non-callable FD:

  • Safety of the Principal Amount: Check the financial health of the FD issuer to avoid the risk of default 

  • Tax Implications: Consider the post-tax returns to see if the returns meet your financial needs since the interest earned is fully taxable as per your income tax bracket 

  • Long-term Commitment: Assess your liquidity needs and whether you foresee an urgent need for access to funds since these FDs have a strict lock-in period
  • Goal Suitability: Ensure that the duration and returns of the non-callable FD align with your financial goals

Conclusion

Before investing in a non-callable FD, consider your liquidity needs, investment goals, and desired tenor. While these FDs have a mandatory lock-in period, they could be suitable for long-term investors. 

 

On Bajaj Markets, you can explore FDs from reputed issuers offering competitive interest rates of up to 9.40% p.a. Choose an FD that best aligns with your financial goals and boost your payout.

Frequently Asked Questions

How is the interest calculated on non-callable deposits?

FD issuers compute your interest earnings based on simple and compound interest formulas. 

Can minors open a non-callable fixed deposit account?

Yes, but the eligibility criteria may differ across FD issuers. 

What are the advantages of non-callable fixed deposits?

Non-callable FDs offer higher interest rates than callable FDs and savings accounts.

What is the primary difference between callable and non-callable fixed deposits?

You can withdraw the invested amount in a callable deposit after paying a small penalty. On the other hand, you are not allowed to withdraw the sum in a non-callable deposit before the tenor ends.

Can I close my non-callable fixed deposit account?

Closing a non-callable FD is subject to certain conditions and rules. Check the procedure for FD closure with the issuer before investing.

What is a non-callable deposit?

Non-callable FDs are a type of investment that do not allow premature withdrawals. This means your funds will be locked for the entire tenor. 

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