Investment & Financial Planning

Callable vs Non-Callable Fixed Deposits for NRIs

Vipul Jain
Written by Vipul Jain
Updated on: May 28, 20266 mins Editorial Standards
Callable vs Non-Callable Fixed Deposits for NRIs

Callable FDs are a type of fixed deposit that can be withdrawn before the maturity date. Although it offers flexibility and liquidity, early withdrawal can often incur penalties. These are ideal for investors who need immediate access to funds at any time. It offers slightly lower interest rates, and investors can withdraw either a partial or the full amount before the tenure ends. 

Conversely, non-callable FDs don't allow early or premature fund withdrawal before the maturity date. It has a fixed lock-in period and is designed for high-value investments. Compared to callable FDs, these offer a higher interest rate. Exceptions for premature withdrawals may be permitted only in cases of bankruptcy, the holder's death, or court orders. The choice between a callable and non-callable FD depends on your current financial situation. Keep reading to know more about callable and non-callable fixed deposits to make the right choice. 

Key Takeaways
  • Callable FDs allow early withdrawals, whereas non-callable FDs cannot be withdrawn before maturity date and has strick lock-in period. 
  • Callable FDs are ideal for investors seeking liquidity or short-term goals. Conversely, non-callable FDs are best for individuals seeking higher returns with long-term investment goals. 
  • Non-callable FDs offer higher interest rates as compared to callable FDs. 
  • Callable FDs have a low minimum investment requirement, while non-callable FDs often require a higher minimum investment. 
  • Callable FDs attract penalties on premature withdrawals, while non-callable FDs don't allow premature withdrawal, hence have no risk of penalties. 

Difference Between Callable and Non-Callable Fixed Deposits

The table below lists the key differences between a callable and a non-callable fixed deposit:

Basis

Callable Deposit

Non-Callable Deposit 

Meaning

These FDs can be withdrawn before maturity

These FDs cannot be withdrawn before maturity and are locked in until maturity

Interest Rate

May be lower, with penalties applied on early withdrawals

Since withdrawals are not allowed, the rates are more competitive

Liquidity

Highly liquid, as you can access funds in emergencies

Low liquidity because funds cannot be accessed until the term ends

Ideal for

Investors who may need quick access to money

Investors seeking higher returns and long-term investment

What is Callable FD? 

Callable FD (fixed deposits) allows the investor to withdraw the deposit before the maturity date. It offers the flexibility to 'call' or redeem your deposit whenever you want, before the term ends. This can be done either fully or partially. However, banks may charge a penalty for withdrawing the money before the deposit's maturity. 

These types of FDs are ideal for individuals who may need quick access to their funds in case of an emergency or unexpected fund requirement. 

Key Benefits of a Callable Fixed Deposit

Here are some of the key benefits of a callable fixed deposit:

  • Callable FDs offer liquidity to the investor. The funds are easily accessible anytime to fulfill financial emergencies for both big and small investors. 
  • These FDs are risk-free and have a low minimum investment requirement, usually starting from Rs. 1,000. 
  • In terms of investment and tenure, a callable FD investment offers great flexibility. The tenure may vary from 7 days to 10 days based on your financial goals and budget. 

What are Non-Callable Fixed Deposits?

A non-callable FD doesn't allow premature withdrawals. It comes with a fixed lock-in tenure, and you cannot withdraw the funds before the specified maturity date. In special cases, premature withdrawal may be permitted, such as a court order mandate, death of the account holder, etc.

Compared to a regular FD, the initial deposit requirement for a non-callable FD is higher. It also offers higher interest rates as your funds remain locked for the entire investment tenure duration. These FDs are ideal for investors seeking long-term investment and higher returns. For NRIs, it is ideal for those who wish to maximise the return on their foreign earnings while also keeping the funds secure in India until maturity. 

Key Benefits of a Non-Callable Fixed Deposit

Here are some of the key benefits of a non-callable fixed deposit: 

  • Non-callable FDs offer higher interest rates as compared to regular callable FDs. 
  • It locks in your investment for a predetermined duration, which may vary from 1 to 2 years.
  • It has low reinvestment risk, and the returns for non-callable FDs are highly predictable.

Choosing Between Callable and Non-Callable FDs 

The choice between callable vs non-callable FDs depends on your current financial situation. It includes the predictability of your income and expenses and the duration for which you can lock away funds. Here is how you can choose between callable vs non-callable FDs:

Callable FDs

Non-Callable FDs

It is ideal if you think you need access to your funds before the deposit term ends

It works if you are confident that you will not need the funds

For short-term goals or unexpected financial situations 

For long-term goals where the funds remain untouched

Ideal for conservative investors as it carries lower risk due to its liquidity

It offers higher returns but has the disadvantage of not getting access to funds during emergencies
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The Bottom Line

Callable and non-callable FDs satisfy the needs of different types of investors who have various financial needs. Callable FDs are ideal for individuals with short-term investment goals as it offers flexibility and liquidity. Conversely, non-callable FDs are ideal for individuals with long-term savings goals and who want to earn higher returns.

Moreover, if you need assistance with making the right choice for NRI investments, connect with Savetaxs. At Savetaxs, our team carries good knowledge and expertise regarding tax regulations, global compliance requirements, and NRI investment options. We can help you choose the right investment option that yields higher returns. Contact us today and make smart Indian investments while staying compliant with the RBI rules for NRI investment

Glossary
  • Capital: Capital, a Financial Term Used for Business Operations, Like Bank Accounts, Stocks, Assets, Etc.
  • Capital Gain: Capital Gains, Profits on the Financial Assets at the Time of Selling.
  • Double Taxation Avoidance Agreement (DTAA): DTAA, an Agreement Signed Between the Countries to Avoid Double Taxation.
  • MAT Credit: MAT credit, the difference between MAT and normal tax liability, carried up to 15 years.
Related Articles

This article is for general informational purposes only and does not constitute tax, legal, financial, or investment advice. Laws, regulations, rates, and procedures may change over time and may vary based on individual circumstances.

While SaveTaxs makes reasonable efforts to keep the information accurate and up to date, readers should verify applicable rules with official authorities or consult a qualified professional before making decisions based on this information.

About Author
Vipul Jain
Vipul Jain Co-Founder & NRI Tax Advisor

Vipul Jain is the Co-Founder of SaveTaxs and a tax expert with experience in Indian and NRI taxation. He advises individuals, NRIs, and businesses on tax filing, tax planning, capital gains, DTAA, and compliance matters. He focuses on making complex tax concepts simple and helping taxpayers make informed, compliant decisions. See Full Bio

  • Written by
    Vipul Jain
    Co-Founder & NRI Tax Advisor
  • Reviewed by
    Hatim Dudhiyawala
    Certified Public Accountant (CPA)
  • Last reviewed
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Frequently Asked Questions

A callable fixed deposit allows an investor to withdraw the deposit before the maturity date, while a traditional FD continues for the entire tenure without interruption.

No, the interest rate remains fixed once you open the FD. However, if the bank recalls the FD, only the tenure may get shortened.

No, a non-callable FD cannot be withdrawn before maturity. It comes with a strict lock-in period, and funds cannot be withdrawn until the tenure ends, except in special cases like the depositor’s death or a court directive.

The better option depends on your financial goals. If you need flexibility and emergency access to funds, callable FDs are suitable. If you want higher returns and can lock in funds for a fixed tenure, non-callable FDs are a better choice.

The minimum deposit for a callable FD is generally low, usually starting from ₹1,000 to ₹10,000, depending on the bank or financial institution.