FD premature withdrawal charges: SBI vs HDFC Bank vs ICICI Bank vs PNB vs Yes Bank

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Due to its numerous advantages, a fixed deposit is thought of as one of the safest investments and is considered the preferred investment product by investors. And with banks increasing FD interest rates since May 2022, many FD investors are in a fix as to if they should break their FDs or not.
One of the things that you need to be aware of if you are planning on prematurely withdrawing your FD is the premature withdrawal penalty.

Banks offer premature withdrawal facility to their customers but often with a penalty. This FD feature is helpful for people who require emergency cash for things like medical emergencies, financial problems brought on by losing their jobs, debt repayment, and other things.

Also read:
Now bank FDs are offering over 9% return, is it time to break your old low-interest FD and reinvest?

Also read:
How interest on bank FD is calculated in case of premature withdrawal

Here is a look at the premature FD withdrawal penalty charges of SBI, HDFC Bank, ICICI Bank, PNB, Canara Bank and Yes Bank. (Information as per banks’ websites.)
State Bank of India penalty on FD premature withdrawal

According to the SBI website, “For Term Deposit up to Rs 5.00 lacs, the penalty for premature withdrawal will be 0.50% (all tenors). For Term Deposits above Rs 5.00 lacs, the applicable penalty will be 1% (all tenors).”

However, no interest will be paid on deposits held for fewer than seven days. The interest rate will be 0.50 percent or 1% less than the rate applicable at the time of deposit for the period deposits remained with the bank, whichever is less, or 0.50 percent or 1% less than the contracted rate, whichever is less.

HDFC Bank penalty on FD premature withdrawal

According to HDFC Bank website, “For such premature withdrawals, including sweep-ins and partial withdrawals, the Bank will levy a penalty of 1%, on the applicable rate. However, penalty for premature withdrawal will not be applicable for FDs booked for a tenor of 7-14 days.”

The interest rate that applies to premature deposit closures (including sweep-ins and partial withdrawals) will be the lower of: the interest rate during the initial or agreed-upon term for which the deposit was booked OR the interest rate during the term for which the deposit was booked

PNB penalty on FD premature withdrawal

According to the PNB website, “1% penal interest shall be charged at the time of premature cancellation/part withdrawal of domestic term deposits for all tenors and interest rate payable would be contractual rate minus 1% or the rate under the scheme on the contractual date applicable for the tenor for which the deposit has actually run minus 1%, whichever is lower.”

If the deposit is prematurely closed in order to invest in another term deposit plan offered by the bank, no penalty will be levied as long as the deposit remains with the bank for a period longer than the original contract’s balance.

Premature withdrawal of term or fixed deposits may be permitted to the surviving depositor in cases of term deposits with “Either or Survivor” or “Former or Survivor” mandates without obtaining the consent of the legal heirs of the deceased joint deposit holder if there is a joint mandate to that effect from the joint depositors. In these cases, there will be no penalties for premature withdrawal.

ICICI Bank penalty on FD premature withdrawal

In addition to any applicable penalty, interest will also accrue at the lower of the contracted rate for the deposit or the rate in effect at the time the deposit was held with the bank.

Deposits with a maturity of less than one year and sums under Rs. 5 crore would incur a 0.50 percent penalty. There is a 1% fine for stays of one year to 5 years and above.

Canara Bank penalty on FD premature withdrawal

According to the Canara Bank website, “A penalty of 1.00% shall be levied for premature closure/part withdrawal/premature extension of Domestic/NRO term deposits of less than Rs. 2 Crore that are accepted /renewed on or after 12.03.2019.”

“For premature closure/part withdrawal/premature extension of Domestic/NRO term deposits, the Bank imposes a penalty of 1.00%. Such prematurely closed/part withdrawn/prematurely extended deposits will earn interest at 1.00% below the rate as applicable for the relevant amount slab as ruling on the date of deposit and as applicable for the period run OR 1.00% below the rate at which the deposit has been accepted, whichever is lower,” as per the bank website.

Yes Bank penalty on FD premature withdrawal

If the FD closed in less than 181 days long, a 0.50 percent penalty will be levied. A 0.75 percent penalty will be levied if your tenure is 182 days or longer. Yes Bank does not impose an early withdrawal penalty on their senior customers.

Points to note

There are two things you should be aware of before choosing to prematurely redeem your FD assets.

1) How the bank determines the amount refunded by calculating interest on the FD.

2) And how the amount that is paid to you is impacted by the imposition of a penalty for early withdrawal.

How is interest calculated on FD

When a fixed deposit is prematurely withdrawn, the effective interest rate will be the lowest of the booked rate (the rate at which the FD account was formed) or the card rate for the time period that the FD was still with the bank as of the starting date of the fixed deposit account. Penalty fees typically range between 0.5 and 1% of the interest rate.

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