Banks give the option of premature withdrawal of fixed deposits (FDs) to customers, and charge a penalty for the deposit being closed before expiry of its maturity period. However, some banks will not charge customers if the amount being withdrawn is invested in another investment option offered by that bank.
FDs can be closed on the mobile app of the bank, via net banking, or by visiting the nearest branch. Here are the rules, and penalty charged by private lenders, public lenders, and non-banking financial companies (NBFCs) on premature withdrawal of fixed deposits:
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State Bank of India (SBI): For amount of up to ₹5 lakh, you will pay a fine of 0.50%, and 1% on more than ₹5 lakh. Also, for deposits held by it for less than 7 days, no interest is paid.
Punjab National Bank (PNB): For FDs of all tenors, a penalty of 1% is levied. Also, interest is paid at contractual rate minus 1%.
HDFC Bank: Here, customers will have to pay 1% fine. Interest rate will be lower than the original tenure rate.
ICICI Bank: For early closure (less than 1 year) of deposits of less than ₹5 crore, 0.5% fine will be charged, and 1% if closed after 1 year. For more than ₹5 crore, 1% and 1.5% will be charged if closed in less than 5 years and after 5 years, respectively.
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Bajaj Finance: No cancellation is allowed in the first 3 months. No interest is paid if cancelled between 3 and 6 months. If cancelled after 6 months, a penalty of 2-3% is levied (subject to terms and conditions).
