The NHB guidelines on redemption of FD is a welcome move for FD customers as well as the HFCs as it will enhance operational efficiencies
The housing finance companies' (HFC) regulator National Housing Bank (NHB) has announced a slew of changes that brings fixed deposits (FDs) with HFCs on similar lines to bank FDs, including giving customers a window to withdraw some part of their deposits in case of any exigency without being subjected to any lock-in.
The NHB guidelines on redemption of FD is a welcome move for FD customers as well as the HFCs as it will enhance operational efficiencies.
"According to the new guidelines, while creating an FD, the customer will be given an option to choose auto-renew or auto-pay the funds on maturity. As a result, there will be no loss of interest to the customer post maturity of deposit. Also, earlier the customer had to surrender the physical receipt for FD maturity payment or renewal from HFCs. But with the new guidelines, the customer can now redeem/ renew his / her FD seamlessly, thereby enriching the customer experience," says Harshil Mehta, joint MD and CEO, DHFL.
With the changes, the terms of FDs with HFC would be on similar lines to the bank FDs, according to Ravindra Sudhalkar, ED and CEO, Reliance Home Finance. "It also brings about a uniformity in the deposit offerings of various HFC as far as the terms and conditions are concerned. All the changes as directed by the regulator are client friendly and aimed at bringing in more transparency," Sudhalkar added.
The new guidelines have also relaxed the earlier rule of a three-month minimum lock-in, thus giving customers a window to withdraw some part of their deposits in case of any exigency. So far, the deposits were not repayable within a period of three months from the date of acceptance.
Under new norms, the customer will be able to withdraw 50% of the FD amount or Rs 5 lakh whichever is lesser in case of exigencies. "This is indeed good news for the customers as it creates a liquidity provision for them which can be exercised in case of an extreme financial exigency," said Mehta.
The NHB has said that expenses of an emergent nature include medical emergency or expenses due to natural calamities/disaster as notified by government/authorities. If the depositor is suffering from any critical illness, 100% of the amount of principal sum of deposit will be prematurely paid at the request of the depositor. The definition of critical illnesses will be guided by IRDA's Health Insurance Regulations, 2016, said the notification issued by Sriram Kalyanaraman, MD and CEO, NHB.
There are altogether 12 HFCs granted the certificate of registration with permission to accept public deposits, while there are six other HFCs that are required to obtain prior written permission before accepting any public deposits from the NHB.
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