What is Premature Withdrawal
Fixed deposits, with a premature withdrawal facility, allow the depositor to close the FD before the date of maturity arrives. This comes as a relief in times of cash crunch.
However, a certain amount may be required to be paid by the depositor as a penalty to the bank. This usually ranges between 0.5% and 1%. Some banks do offer premature withdrawal facilities with zero penalty charges.
However, if the FD is prematurely closed, before completing 7 days from the date of the booking, the bank or the company is not liable to pay any interest.