What are Non-Callable Fixed Deposits?

The Rise of Non-Callable Fixed Deposits in Modern Investing

Fixed Deposits (FDs) have long been a preferred choice for individuals seeking reliable returns with low risk. Among these, non-callable fixed deposits have gained popularity for their attractive features. Introduced by the Reserve Bank of India (RBI) in 2013, non-callable FDs were designed to provide banks with greater certainty over funds and to reduce liquidity risks.

A non-callable fixed deposit is one where premature withdrawal is not permitted until the maturity period ends. Unlike callable deposits, which allow early withdrawal with penalties or reduced interest, non-callable FDs offer comparatively higher returns as compensation for this restriction.

For investors researching the meaning of non callable FDs, these deposits represent a disciplined investment tool offering stability, consistent income, and enhanced interest rates for those comfortable locking in their funds for a chosen duration.

Benefits of Non-Callable Fixed Deposits

Non callable fixed deposits offer several advantages that make them appealing to cautious investors:

• Higher Interest Rates
  • Banks can rely on funds for a fixed tenure, enabling them to provide superior returns compared to callable FDs.
  • Especially attractive in a low-interest environment where maximising earnings is crucial.
  • With options like Airtel Finance Fixed Deposit, investors can benefit from some of the most competitive non-callable FD rates in the market.
• Predictable and Stable Income
  • Investors know the exact interest they will earn, aiding financial planning.
  • Particularly valuable for retirees and conservative investors who rely on steady income.
• Assured Safety of Funds
  • With no premature withdrawal option, funds remain invested securely until maturity.
  • Helps in disciplined wealth building.
  • Added security is supported by deposit insurance.
• Simplicity of Investment
  • Straightforward to invest in, requiring minimal management.
  • No need to track market movements or worry about fluctuating returns.
• Better Planning for Banks and Investors
  • Since banks are assured of fund availability, they extend higher FD interest rates, creating a win-win for both sides.

Considerations and Drawbacks

While non-callable FDs offer attractive benefits, investors should also weigh the limitations:

• Restricted Liquidity
  • Funds cannot be withdrawn before maturity.
  • Can be challenging during emergencies or unforeseen financial needs.
  • Smart alternatives include using FD laddering
• Taxation of Interest
  • Interest income is taxable and added to the investor’s total income.
  • Those in higher tax brackets may see reduced effective returns.
• TDS Deductions
  • Banks deduct Tax Deducted at Source (TDS) if annual FD interest exceeds ₹40,000.
  • This can impact cash flow, particularly for individuals relying on FD income.

Ideal Investors for Non-Callable Fixed Deposits

Non-callable fixed deposits are not suited for everyone. They are most beneficial for:

• Individuals who can comfortably lock in funds without needing early access.
• Retirees and pensioners seeking predictable income streams.
• Investors looking for higher returns than standard FDs.
• Those aiming to diversify their portfolio with safe, long-term instruments.
• Conservative investors who prefer guaranteed returns over market-linked risks.
• Some even compare them with sovereign gold bonds before investing.

Choosing the Right Non-Callable Fixed Deposit

Selecting the right option is crucial to maximising benefits. Key factors include:

• Interest Rates
  • Compare rates across banks and financial institutions to secure the best returns
  • Review guides on FD interest calculation for accurate return estimates.
• Tenure
  • Typically ranges from 1 year to 10 years.
  • Match the tenure with your financial goals and liquidity needs.
• Terms and Conditions
  • Review all details carefully, especially restrictions on withdrawal.
  • Ensure no hidden charges are attached.
• Credibility of the Institution
  • Opt for banks or financial institutions with strong reputations and credit ratings.
  • Prioritise safety and reliability to protect your investment.
• Customer Experience
  • Consider institutions offering seamless digital booking, minimal paperwork, and transparent processes.

Ready to Invest? Choose Non-Callable Fixed Deposits with Confidence

Non callable fixed deposits are a solid investment choice for individuals seeking security, higher returns, and predictable income without the flexibility of premature withdrawals. They balance attractive interest with disciplined wealth-building.

Looking to grow your savings with confidence? Book your non-callable FD today through Airtel Finance Fixed Deposit on the Airtel Thanks app and enjoy unmatched convenience with assured returns.

FAQs

1. What happens if I need to withdraw my money from a non-callable fixed deposit before maturity?

Withdrawing funds from a non-callable fixed deposit before maturity is generally not allowed. In exceptional cases where withdrawal is permitted, significant penalties and loss of accrued interest may apply. It’s crucial to understand these terms before investing.

2. Are the interest rates for non-callable fixed deposits fixed for the entire tenure?

Yes, the interest rates for non-callable fixed deposits are fixed for the entire tenure. This ensures predictable and stable returns, making it easier for investors to plan their finances.

3. How is the interest from non-callable fixed deposits taxed?

Interest earned from non-callable fixed deposits is added to the investor’s total income and taxed according to their income tax slab. Banks also deduct TDS if the interest income exceeds ₹40,000 in a financial year.

4. Can I take a loan against my non-callable fixed deposit?

Some banks offer the option to take a loan against a non-callable fixed deposit. This allows investors to access funds in emergencies without breaking the deposit and losing interest. The terms and conditions for such loans vary by institution.

5. How do I choose the best non-callable fixed deposit?

To choose the best non-callable fixed deposit, compare interest rates, tenure options, and the credibility of the issuing bank. Review the terms and conditions carefully to understand any penalties or restrictions associated with the deposit.