Yes, you can withdraw a Fixed Deposit (FD) before its maturity date, but it is known as premature withdrawal and often comes with certain conditions and penalties.
1. Premature Withdrawal Rules
Most banks and financial institutions in india allow premature withdrawal of fds. However, withdrawing early may result in a lower interest rate than initially promised, and some banks may also charge a penalty fee, usually around 0.5% to 1% of the interest earned.
2. Penalty Charges
If the prevailing interest rate for the tenure you held the FD is lower than the original rate, you will receive the lower rate minus the penalty. For example, if your FD was booked at 7% for 1 year but withdrawn after 6 months when the 6-month rate is 5.5%, you might only get 5% interest after penalties.
3. Exceptions
Some banks offer no-penalty FD schemes, where you can make partial withdrawals without losing interest on the remaining amount (e.g., SBI’s Multi Option Deposit Scheme or ICICI’s Flexi fds).
4. Tax Consideration
Interest earned on fds is taxable, and banks may deduct TDS (Tax Deducted at Source) if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.
5. Process
To withdraw, visit your bank branch or use internet banking/mobile apps. The amount is usually credited to your account within a few hours to a couple of days.
Conclusion:
While you can withdraw an FD anytime, it is best to check the terms and understand the financial impact before doing so.
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