FD investors should keep in mind that banks charge a penalty on premature withdrawal. In such a case, they may have to face losses. Please note that the penalty on premature withdrawal can be waived only on the basis of certain conditions.
New Delhi: After the Reserve Bank of India (RBI) announced a cut in the repo rate in the first monetary policy meeting for the year 2025, discussions about cutting the interest rates on fixed deposits (FD) have intensified. In such a situation, many FD investors can consider premature withdrawal of their existing fixed deposit scheme and re-investment for the long term at the current rate before the commercial banks revise the FD interest rates.
You may have to pay a penalty on premature withdrawal
But, FD investors should keep in mind that banks impose a penalty on premature withdrawal. In such a situation, they may have to face losses. Let us tell you that the penalty on premature withdrawal can be waived only on the basis of certain conditions. Such as re-investing with the same bank again for long term interest. In such a situation, before taking any step, investors should know well about the fine structure with their bank and the interest received on premature withdrawal.
Let us tell you that all banks impose different penalties on premature withdrawal of FD. However, this penalty is usually between 0.5% to 1%. Let us know about the penalty on premature withdrawal of State Bank of India (SBI), Punjab National Bank (PNB) and HDFC Bank.
SBI Term Deposit
State Bank of India charges a penalty of 0.50% on pre-withdrawal of term deposits up to Rs 5 lakh, while there is a penalty of 1 per cent on term deposits above Rs 5 lakh. At the same time, Punjab National Bank will pay 0.5 or 1 per cent less interest than the interest rate on FD on withdrawal before maturity.
HDFC Bank Penalty
At the same time, HDFC Bank will pay 1 per cent less interest than the interest rate on FD on withdrawal before maturity. According to the HDFC Bank website, from July 22, 2023, the interest rate for premature withdrawal, including sweep-in and partial withdrawal, will be 1% less (with applicable penalty) than the rate on the date of deposit. Which will be based on the period of deposit with the bank instead of the contracted rate.
PNB premature withdrawal penalty
Apart from this, Punjab National Bank charges a penalty of 1 per cent for premature withdrawal/or partial withdrawal of domestic FDs. However, if you break a PNB FD and open another FD in the same bank, then there will be no penalty. However, for this you will have to invest for a longer period than the period of the broken FD.
