Premature Withdrawal of Fixed Deposit: SBI, ICICI, HDFC, Kotak

Fixed deposits are popular investment options for people these days who are looking for investments with assured returns. Fixed Deposits can be broadly categorized into two types – with premature withdrawal and without premature withdrawal along with a compulsory lock-in or maturity period.

Fixed deposits with premature withdrawal facility allows the depositor to close the FD even before the maturity period. However, a certain amount may be required to be paid by the depositor as a penalty to the bank. Some banks do offer premature withdrawal facility with zero penalty charges. On the other hand, with fixed deposits without premature withdrawal, the depositor has to wait for the specified maturity date for money withdrawal.

Banks such as ICICI Bank, State Bank of India (SBI), Kotak Bank, HDFC Bank, etc. have their own specific terms and conditions for those who are willing to withdraw their money from the fixed deposits before the completion of the maturity period.

Premature Withdrawal of Fixed Deposit

Given below is a comprehensive comparison of the rules for premature withdrawal on Fixed Deposits by the leading banks in India:

1. Premature Withdrawal of Fixed Deposit SBI- The bank provides its customers with premature withdrawal facility on Fixed Deposits. This facility came into effect from April, 01, 2017. However, certain rules are applicable along with a penalty that the investor has to pay for early withdrawal. The rules include:

For retail term or fixed deposits amount up to Rs. 5 Lakh, the bank will charge a penalty of 0.50% for all tenures for premature withdrawal
For retail fixed deposits amount above Rs. 5 Lakh but below Rs. 1 crore, the applicable penalty is 1% for all tenures
The interest rate shall be 0.50% or below 1% applicable at the time of deposits for the time period deposit remained with the bank or 0.50% or below 1% the contracted rate will be applicable, whichever is lower. One point to keep in mind is that the bank will not pay any deposits which remain for the period of less than 7 days.

To Know more about SBI FD Rates & Schemes

Since the premature withdrawal of fixed deposit with SBI online available, no need to make rounds of the branch for the same. For more details about the withdrawal process and documents required for the same, call the customer care team of SBI at toll free number 1800-425-3800, 1800-11-2211 and toll number 080-26599990.

2. Premature Withdrawal of Fixed Deposit ICICI- On premature withdrawal on the domestic, Non-Resident Rupee (NRE) and Non-Resident Ordinary Rupee (NRO) accounts fixed deposits, the penalties levied by the bank have been tabulated below:

Penalties Levied by the Bank on Premature Withdrawal
Original Policy Tenure	Amount Less than Rs. 5 Cr.	Rs. 5 Cr. and Above
Less than 1 year	0.50%	0.50%
1 year and above but less than 5 years	1.00%	1.00%
5 years and above	1.00%	1.50%

Please note that the request for premature and partial withdrawal will be processed in one business/ working day. Requests cannot be canceled for premature withdrawal, if placed.

To know more about ICICI Bank FD Rates & Schemes

3. Premature Withdrawal of Fixed Deposit HDFC- The bank allows the depositor to withdraw their invested amount even before the completion of the maturity period. The rate of interest applicable for premature withdrawal of fixed deposits will be lesser of:

The base rate for the contracted/original tenure for which the amount has been booked
The base rate of interest applicable for the period for which the amount has been invested with HDFC Bank

Base Rate is the rate of interest applicable on Fixed Deposits on the day of booking the deposit.

For premature withdrawals, partial withdrawals and sweep-ins, the bank will levy 1% penalty on the rates applicable. However, penalties for premature withdrawals will not be applicable for fixed deposits booked for the tenure of 7-14 days.

To know more about HDFC FD Rates & Schemes

4. Premature Withdrawal of Fixed Deposit Kotak Bank- As per the prevailing terms and conditions of Fixed Deposits laid out by the bank, the penalty charges on premature closure along with partial closure have been fixed. The penalty rates are in effect from November 1, 2012. These include:

Investment Tenure of the Fixed Deposit	Penalty Charged by the Bank
For less than 181 days	NA
For 181 days and above	0.50 %

To know more about Kotak Mahindra Bank FD Rates & Schemes

How to Request for Premature Withdrawal?

The process of premature withdrawal may differ from one bank to another. Some banks provide the online facility but you may have to write a ‘premature withdrawal of fixed deposit’ letter for the same. There is a specified format of the letter. One can visit the bank or call the customer care team to know the format. In fact, you can also find the format online. Write a letter as per the format and apply to the bank to request for the premature withdrawal of the fixed deposit.

Things to Keep in Mind for Premature Withdrawal

The following are the points to keep in mind while requesting for premature withdrawal:

Penalties: In case of premature withdrawal, the investor has to pay a certain amount as a penalty to the bank. The amount charged by the bank as a penalty is generally from 0.50 % to 1.00 % of the interest. The penalty may change over time as and when the bank decides to update its policies.
Loss of Interest: When an individual withdraws before maturity, they must know that they will not get the exact amount based on the rate of interest and duration of the fixed deposit because it has withdrawn before the tenure that was decided on the date of booking the FD. While calculating the amount you will receive after premature withdrawal, make sure to include the penalty charges as well.
Halt to the Financial Growth: Fixed Deposits are designed to provide the depositor with guaranteed returns in the form of interest on the date of maturity. If you have planned cash flow with a series of FDs, the premature withdrawal of the scheme will disturb your cash flow and might affect your budget.
Premature Withdrawal is a Cumbersome Process: Along with everything else, it is a fact that a premature withdrawal of the deposit is a cumbersome process and not a simple transaction. One has to go through a number of steps to complete the process. The formalities of the process include filling forms, meeting the officials of the bank, submitting documents, etc.