New RBI Rules On Premature Withdrawal For NBFC Depositors: All You Want To Know

New Delhi: The RBI on has issued revised guidelines for housing finance companies (HFCs) and Non-Banking Financial Companies (NBFCs) regarding Acceptance of Public Deposits.

"Accordingly, based on a review of the extant regulations applicable to HFCs prescribed vide Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, it has been decided to issue revised regulations as detailed in the Part A of Annex. As part of the exercise, certain regulations applicable to NBFCs have also been reviewed and revised regulations are detailed in Part B of Annex. The revised regulations shall be applicable with effectfrom January 01, 2025," the RBI issuing the Review of regulatory framework for HFCs and harmonisation of regulations applicable to HFCs and NBFCs said on August 12.
 
Here's All You Want To Know About The Revised RBI Guidelines Regarding The Acceptance Of Public Deposits For NBFCs.

- RBI said, attention is invited to chapter V of Master Direction – Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016. It has been now decided that for a non-banking financial company not being a problem Non-Banking Financial Company6, in order to meet certain expenses of an emergent nature, subject to the satisfaction of the NBFC concerned about such circumstances–

- Tiny deposits may prematurely be paid to individual depositors, at the request of the depositor, before the expiry of three months from the date of acceptance of such deposits, in entirety, without interest. Tiny deposit means the aggregate amount of public deposits not exceeding Rs 10,000/- standing in the name of the sole or the first named depositor in the same capacity in all the branches of the non-banking financial company.

- In case of other public deposits, not more than fifty per cent of the amount of the principal sum of deposit or Rs 5 lakh, whichever is lower, may be prematurely paid to individual depositors, at the request of the depositors, before the expiry of three months from the date of acceptance of such deposits, without interest; the remaining amount with interest at the contracted rate shall be governed by the provisions of the extant directions as applicable for public deposits

- Provided that in cases of critical illness, hundred per cent of the amount of the principal sum of deposit, may be prematurely paid to individual depositors, at the request of the depositors, before the expiry of three months from the date of acceptance of such deposits, without interest.

a. For this purpose, expenses of an emergent nature include medical emergency or expenses due to natural calamities/ disaster as notified by the concerned Government/ authority.

b. For the definition of ‘Critical illness’, NBFCs shall be guided by the IRDAI (Health Insurance) Regulations, 2016 and the guidelines issued thereunder, as amended from time to time.

c. The amount as per these provisions shall also apply to the existing deposit contracts wherein the individual depositor does not have a right to premature withdrawal of the deposit before the expiry of three months.

- NBFCs need to intimate the details of maturity of the deposit to the depositor at least two months before the date of maturity of the deposit. It has been decided to reduce the period from two months to 14 days. Accordingly, it shall be the obligation of NBFC to intimate the details of maturity of the deposit to the depositor at least 14 days before the date of maturity of the deposit.

- It is advised that NBFCs may maintain the particulars/ details of the deposits, as required under the above-mentioned para, on centralized computer database; provided the authenticated particulars of public deposits are sent to the respective branches, updating the information on quarterly basis i.e. as on March 31, June 30, September 30 and December 31, every year irrespective of the fact that the branch does not open deposit accounts. The information pertaining to a quarter should reach the branch concerned before the 10th day of the next quarter.

- RBI said, NBFCs which are accepting public deposits need to comply with the provision of the Banking Companies (Nomination) Rules, 1985. In terms of the Rule 2(9) of the said rules, NBFCs are required to acknowledge in writing to the depositor/s the filling of the relevant duly completed form of nomination, cancellation and/or variation of the nomination. It is now advised that NBFCs shall devise a proper system of acknowledging the receipt of duly completed form of nomination, cancellation and/or variation of the nomination. 

- Such acknowledgement shall be given to all the customers irrespective of whether the same is demanded by the customers. Further, NBFCs shall introduce the practice of recording on the face of the passbooks/ receipts the position regarding availment of nomination facility with the legend “Nomination Registered” and they shall also indicate the name of the Nominee in the passbook/ receipt, in case the customer is agreeable to the same.

- Deposit taking NBFCs are required to maintain liquid assets under Section 45-IB of the RBI Act and such liquid assets shall be entrusted for safe custody with specified entities as stated in para 33 of Master Direction – NBFC- Acceptance of Public Deposits Directions, 2016. Since approved securities are now being maintained only in dematerialized form, the provisions of para 33(5) of these directions are withdrawn.