Fixed deposit withdrawal rule: This bank FD scheme has no premature withdrawal penalty. Check details here

Bank fixed deposit (FD) withdrawal rule: If you want to withdraw the amount, you will have to pay the lenders a penalty charge

Updated24 May 2023, 02:21 PM IST

It is important to understand the premature withdrawal rules on bank fixed deposits in case of an emergency.(iStock)

Fixed deposit withdrawal rule: Indian banks have increased their deposit interest rates multiple times since the RBI started hiking the repo rate in May 2022. Experts believe that it is now a good time for conservative investors to invest in term deposits and get assured returns. Before parking your money in these deposits, it is important to understand the premature withdrawal rules on bank fixed deposits in case of an emergency.

Bank FD premature withdrawal rule

Bank FDs offer the option of premature withdrawal of money. If you want to withdraw the amount, you will have to pay the lenders a penalty charge typically ranging from 0.5% to 3% which may vary from bank to bank. SBI charges a penalty of 0.50% on premature withdrawal of FDs up to Rs5 lakh. However, if the investment exceeds ₹5 lakh, the bank charges you a penalty of 1%. HDFC Bank charges a penalty of 1% in case of premature closure of the FD account.

Punjab National Bank Sugam Term Deposit scheme

PNB levies an interest penalty of 1% at the time of premature cancellation or part withdrawal of FDs for all tenors. But in the case of the Sugam Term Deposits scheme, the bank does not levy any premature withdrawal penalty.

Punjab National Bank Sugam Term Deposits premature withdrawal

The depositor has the facility to withdraw any amount before maturity in multiples of ₹1 subject to a minimum withdrawal of ₹1000 at a time, whenever he needs it without breaking the entire deposit and without losing interest on the remaining deposit under the scheme.

“The value of the Term Deposit Receipt (Principal amount) shall be reduced accordingly. No penalty is to be levied in respect of the part withdrawal of the deposit. If any depositor desires to withdraw the entire deposit before maturity, no penalty will be levied and the interest rate payable would be the contractual rate or the rate under the scheme on the contractual date applicable for the tenor for which the deposit has run, whichever is lower,” PNB stated on its website.