In a breather for non-banking finance company (NBFC) depositors, who want to meet certain expenses of an emergent nature, the Reserve Bank of India said they can seek premature repayment of deposits, within three months from the date of placing such deposits, without interest. This is subject to conditions.
As per the current regulations, no NBFC can make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance.
Medical emergency
Expenses of emergent nature include medical emergency or expenses due to natural calamities/ disaster as notified by the concerned government/ authority.
In its “Guidelines regarding acceptance of public deposits by NBFCs”, RBI said an NBFC (not being a problem entity) can allow repayment of “tiny deposits (up to ₹10,000) to individual depositors at their request, before the expiry of three months from the date of acceptance of such deposits, in entirety, without interest.
Further, in case of “other public deposits”, not more than 50 per cent of the amount of the principal sum of deposit or ₹5 lakh, whichever is lower, can be prematurely paid by NBFCs to individual depositors, at their request, 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 will be governed by the provisions of the extant directions as applicable for public deposits.
In cases of critical illness, 100 per cent of the amount of the principal sum of deposit, can be prematurely paid to individual depositors, at their request, before the expiry of three months from the date of acceptance of such deposits, without interest.
The amount as per these provisions will 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.
Nomination rules
The central bank asked NBFCs to devise a proper system of acknowledging the receipt of duly completed form of nomination, cancellation and/or variation of the nomination.
Such acknowledgement should be given to all the customers irrespective of whether the same is demanded by the customers.
Further, NBFCs have been asked to 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 should also indicate the name of the Nominee in the passbook/ receipt, in case the customer is agreeable to the same.
Intimation of deposit maturity
The period of intimating the details of maturity of the deposit by the NBFC to the depositor has been reduced from “at least two months” to “at least 14 days” before the date of maturity of the deposit.