Fixed deposits (FDs) remain one of the most trusted investment instruments for conventional investors in India, and State Bank of India (SBI) has been at the forefront of offering secure and reliable FD solutions for decades. SBI provides comprehensive fixed deposit services to both resident Indians and Non-Resident Indians (NRIs), ensuring safety and predictable returns across diverse investor segments.

For NRI investors, SBI offers specialised deposit schemes including NRE (Non-Resident External) and NRO (Non-Resident Ordinary) fixed deposits, designed to meet the unique financial requirements of Indians living abroad. These NRI-focused products provide attractive interest rates, fully repatriable options in NRE deposits and tax benefits that align with overseas financial planning needs.

But did you know your FD can be either callable or non-callable—and this choice can impact your returns and liquidity for both domestic and NRI investments? With increasing volatility in financial markets, banks and financial institutions have introduced various FD products to cater to different investor needs, including specialised NRE and NRO fixed deposit schemes for NRIs.

This comprehensive guide will demystify callable and non-callable fixed deposits for both resident and NRI investors, explain their features, benefits, and risks, and help you determine which type is best suited for your specific financial situation and residency status.

Overview of Fixed Deposits (FDs)

A fixed deposit (FD) is a low-risk investment where you can park a lump sum amount for a fixed period at a fixed interest rate. It ensures capital protection and steady returns.

The key difference between various FD types lies in their redemption flexibility—specifically whether they are callable or non-callable.

What Are Callable FDs?

A callable fixed deposit is a traditional FD that allows premature withdrawal before the maturity date. As the name suggests, you can "call back" your investment in case of urgent needs, though usually with some penalties or reduced interest rates.

Key Features of Callable FDs:

• Premature Withdrawal Option: This is required for NRIs to invest in equity shares on a repatriable basis. All transactions are routed through an NRE (Non-Resident External) PIS account. The NRI PIS account is regulated by the RBI, ensuring that all transactions comply with foreign exchange regulations. Under this scheme:
• Penalty on Early Withdrawal: SBI typically charges a penalty (usually 0.5% to 1% of the interest rate) for premature withdrawals.
• Interest Rate Adjustment: The interest rate is recalculated based on the actual period for which the FD was held and certain premature conditions.
• Interest Rates: Generally, offers standard fixed deposits interest rates.
• Flexible Tenure: Available for various time periods, from 7 days to 10 years.
• Loan Availability: SBI's callable FDs allow loans against the deposit, typically up to 75-90% of the deposit amount.

What Are Non-Callable FDs?

A non-callable fixed deposit cannot be withdrawn before its maturity date, locking in your investment for the entire tenure with no premature withdrawal option. For Non-Resident Indians (NRIs), banks offer NRE Non-Callable Term Deposits, which provide the same liquidity restrictions but with additional benefits like fully repatriable principal and interest.

Key Features of Non-Callable FDs:

• No Premature Withdrawal: These deposits cannot be withdrawn before maturity.
• Higher Interest Rates: SBI’s non-callable FDs typically offer comparatively higher interest rates than standard fixed deposits.
• Fixed Tenure: Available for specific time periods, usually medium to long-term.
• Limited Availability: Not offered by all banks and financial institutions.

NRE Non-Callable Term Deposits are particularly attractive for NRIs seeking to maximise returns on their foreign earnings while maintaining the flexibility to repatriate funds upon maturity. These deposits combine the higher interest rates of non-callable FDs with the tax advantages that NRIs require for their overseas financial planning.

Who Should Invest in Which Type of FD?

Callable FDs are ideal for investors with limited emergency funds and those who prioritise flexibility. These deposits suit individuals with irregular income patterns, young professionals, and retirees with uncertain expenses. They work well for short to medium-term investment horizons and are perfect for achieving short-term financial goals such as vehicle purchases or house down payments. If you anticipate major expenses soon, callable FDs offer the necessary flexibility to access funds when needed.

Non-callable FDs cater to investors with adequate emergency funds and stable, predictable income streams. These deposits are excellent for mid-career professionals with strong financial discipline who can commit funds for the entire tenure. They are particularly valuable for long-term investment horizons (typically 3+ years) and goals like retirement planning or children's education. In declining interest rate environments, non-callable FDs become especially attractive as they lock in higher rates for extended periods. For investors struggling with financial discipline, these deposits act as a forced savings mechanism.

Key Differences Between Callable and Non-Callable FDs

The fundamental differences between callable and non-callable FDs lie in their withdrawal flexibility and return potential. Callable FDs allow premature withdrawal with penalties of 0.5% to 1% of the interest rate, while non-callable FDs do not permit withdrawal except in exceptional circumstances like depositor's death or court orders.

Non-callable FDs typically offer interest rates that are 0.10% to 0.50% higher than callable FDs. This rate premium compensates investors for sacrificing liquidity and committing funds for the entire tenure. While callable FDs provide flexibility, non-callable FDs reward investors with superior returns.

The ideal investment horizon differs significantly between these variants. Callable FDs suit short to medium-term goals where flexibility is paramount, while non-callable FDs excel for medium to long-term scenarios prioritising returns over liquidity. Additionally, loan facilities are widely available for callable deposits, whereas non-callable FDs may offer loans but with stricter terms.

Important Considerations: Withdrawal Rules & Interest Rates

How to Avail Callable and Non-Callable FDs at SBI

Availing callable FDs:

• Online Banking: Log into SBI's online banking portal or YONO app and select "Fixed Deposit" from the investment menu
• Branch Visit: Visit any SBI branch with required documents (ID proof, address proof, and account details)
• Phone Banking: Call SBI's customer service to book callable FDs over the phone
• Eligibility:Available for both resident Indians and NRIs (through NRE/NRO accounts)
• Minimum Amount: Starting from INR 1,000 for resident Indians and USD 1,000 equivalent for NRIs

Availing non-callable FDs:

• Branch Application: Visit SBI branch as non-callable FDs typically require in-person application and documentation
• Relationship Manager: Contact your dedicated SBI relationship manager for personalized assistance
• Online Request: Submit initial interest through SBI's website, followed by branch visit for completion
• Documentation:Additional paperwork required including commitment letter acknowledging no-withdrawal terms
• NRI Process: NRIs need to specifically request non-callable NRE deposits through designated NRI service branches
• Minimum Amount: Higher minimum investment thresholds typically apply (branch-specific)

Premature Withdrawal Rules

Interest Rate Considerations

Tip: Non-callable FD rates become particularly attractive in a declining interest rate environment, as they allow you to lock in higher rates for longer periods.

Benefits & Risks Comparison

Callable FDs offer flexibility and liquidity, making them ideal for investors who may need emergency access to funds. They are widely available and support changing financial plans. However, they typically offer lower interest rates and carry premature withdrawal penalties (0.5%–1.0%), which can reduce returns. There's also a risk of impulsive withdrawals that can disrupt long-term goals.

Non-callable FDs, on the other hand, offer higher interest rates (usually 0.1%–0.5% more) and help build financial discipline by eliminating withdrawal options. They also shield investors from falling interest rates by locking in returns. However, the lack of liquidity poses risks during emergencies, and the inability to switch to better investments can lead to opportunity costs in a dynamic market.

Making Smart FD Investment Decisions

The choice between SBI's callable and non-callable FDs depends on your financial situation, income stability, and investment timeline. Key decision factors include emergency fund adequacy, income stability, investment horizons of 3+ years, and interest rate expectations.

Ready to invest in SBI Fixed Deposits? Visit your nearest SBI branch, log into YONO app, or contact SBI customer service to explore callable and non-callable FD options tailored to your needs.

NRI customers may connect with SBI's dedicated NRI services team to learn more about NRE and NRO fixed deposit opportunities that maximise your overseas earnings.