Fixed Deposit, or FD, is one of the most trusted and loved investment options in India. People like it because it gives a fixed return and keeps the money safe. For many years, investors have been doing FDs for one year, five years, or even ten years. But here is something new that you may not have heard before. Did you know that the current minimum duration for a bank FD is just seven days? Yes, you can do an FD even for one week.
Now, a major change might be coming very soon. The Reserve Bank of India (RBI) is thinking about allowing banks to offer FDs for less than seven days. This is something that has never been done before. RBI has already asked banks for their opinions and suggestions on this idea. If this change happens, it could become a historic step in the world of savings and investments. Let’s understand what this means and why this move is important for you, for the banks, and for the Indian economy.
Why Is RBI Planning This Move?
This change is not random. RBI is taking this step with a clear purpose. According to recent reports, RBI is worried about the slow deposit growth in Indian banks. As of May 2, 2025, bank deposits grew only by 10 percent compared to last year, when the growth rate was 13 percent. This drop means people are depositing less money in banks. This situation can create liquidity problems for the banks and affect the economy overall.
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To solve this issue, RBI wants to encourage more people to park their money in banks. Allowing FDs for less than seven days could help. Short-term FDs will attract people who don’t want to lock their money for too long but still want to earn some interest. It will also appeal to businesses and companies that have extra funds lying idle for a few days and want to make quick returns safely.
This Isn’t the First Change in FD Rules
This isn’t the first time RBI is thinking about changing FD rules. In 2004, the central bank had made a big change in the minimum FD period. Before that, the shortest duration for an FD was 15 days. RBI reduced it to 7 days to attract more depositors. And now, after more than 20 years, the central bank may take the next step and reduce it further to less than 7 days.
This shows that RBI continues to adjust its policies according to the market and the needs of the economy. The goal is to make banking more flexible and to support the financial system with the right tools at the right time.
What Are Banks Saying About This?
Sources say that RBI recently held meetings with major banks, including State Bank of India, Punjab National Bank, and some private banks. RBI wanted to hear their views on the proposed change. This shows that the matter is being taken seriously, and the decision will not be one-sided.
Some banks are in full support of the idea. They believe that allowing FDs for less than 7 days will give them more freedom. Banks can design their own short-term deposit products based on their requirements. This could also help them collect more funds quickly and increase their liquidity. More liquidity means banks will have more money to lend to customers, which helps in economic growth.
But not everyone is fully happy with this idea. Some banks have raised concerns. Their main worry is something called Asset Liability Mismatch, or ALM. This happens when banks take money for a very short time, like a 2 or 3-day FD, but lend it for a longer period like 2 or 3 years. In this case, the bank may face problems if depositors withdraw money suddenly and the bank doesn’t have enough cash on hand.
What Does This Mean for You?
If this proposal becomes a rule, you as a customer will get a new option. You will be able to put your money in a short-term FD for less than 7 days and still earn interest. This is a big opportunity for people who want safety and returns, even for a very short time. It’s perfect for those who want to keep their money safe between two important expenses or during times when they don’t need immediate cash.
For businesses, this will be even more useful. Many companies have large sums lying unused for a few days. Right now, they don’t earn any interest on that idle money. With ultra-short FDs, they can park their funds safely and earn something instead of nothing.
But, as an investor, you should also keep in mind that the interest rates for such short FDs may not be very high. Also, premature withdrawal may not be allowed or may come with some penalties. So, before jumping in, you should check all terms and conditions offered by the bank.
The Road Ahead
Right now, this change is only in the planning stage. RBI has not made it official yet. But if banks give a positive response and practical suggestions, then this new rule could be introduced soon. If it happens, it will open up new ways to earn interest and make banking even more flexible for the modern world.
So, stay alert and watch out for updates. The day is not far when you could start an FD for just 2 or 3 days and still grow your money with peace of mind. This could change the way people think about saving and investing in India. Be ready to make the most of it when the rule is announced.
