Opening a fixed deposit (FD) is a popular investment choice that most of us opt for. This is because fixed deposits are considered a low-risk investment that gives you secured returns.
When you invest in a fixed deposit, you park a lump-sum amount of money for a fixed period of time. This lump-sum amount that you deposit is your principal amount on which you earn interest. Once your fixed deposit matures, you receive the interest along with the principal. However, in case you’ve opted for non-cumulative FD, you’ll receive the interest amount as per the selected payout option.
However, in an unforeseen situation if you might need funds for urgent expenses and can’t wait for your FD to mature, you can withdraw your FD prematurely.
With the help of premature FD withdrawal, you can get your deposited funds before your FD matures. However, if you withdraw your FD prematurely you may have to pay a certain amount of penalty.
What is a premature withdrawal of fixed deposit?
Premature withdrawal of a fixed deposit occurs when an investor decides to access their funds before the agreed-upon maturity date. Fixed deposits typically offer higher interest rates in exchange for locking the money away for a specified period. However, should the investor need to withdraw the funds early, the financial institution may impose a penalty, which can take the form of a reduced interest rate or a flat fee. This penalty is intended to discourage early withdrawal and to maintain the stability of the bank's deposit base. Investors should carefully consider the financial implications before opting for early withdrawal.
For instance, Anu has opened an FD of Rs. 1 lakh for 12 months. However, after six months she had some urgent medical expenses and needed funds. She can use the premature withdrawal options and get the deposited funds. In this situation, she might not get the entire interest amount, and some deduction may be made as a penalty for withdrawing FD before maturity.
If you’ve invested in Bajaj Finance Fixed Deposit, you can prematurely withdraw your FD by using our digital services. However, it is important to note that you’ll be able to withdraw your FD prematurely only after the three months lock-in period.
In case you withdraw your FD after three months but before six months, you’ll receive only the principal amount. While if you withdraw your FD after six months, the interest payable is 2% lower than the interest rate applicable to a public deposit for the period for which it has run. If no rate has been specified for that period, the interest rate payable is 3% lower than the minimum interest rate at which public deposits are accepted by the NBFC.
If you need funds and looking to withdraw your Bajaj Finance FD prematurely, visit our customer portal – My Account and follow these easy steps.
- Click on the ‘Sign-in’ button on this page to go to My Account – Bajaj Finance customer portal
- Enter your registered mobile number and the OTP to sign-in
- Verify your details by entering your date of birth and proceed
- Select your fixed deposit from the ‘My Relations’ section
- Click on the ‘Premature Withdrawal’ option from the ‘Quick Actions’ section
- Check your prematurity amount, and bank account details and proceed
- Verify your details with the OTP sent to your registered mobile number
In case there’s a joint account holder for your FD, he/ she needs to complete the OTP verification. Once your application process is complete, you’ll receive funds within 24 business hours.
Penalty on premature withdrawal of FD
Interest rate reduction: Banks often reduce the interest rate on the deposited amount for the period the money was held.
Flat fee: Some institutions may charge a fixed penalty fee, which can vary based on the bank’s policies.
Loss of compounded interest: Investors may lose the benefit of compounded interest for the remaining term of the fixed deposit.
Impact on investment goals: Early withdrawal and penalties can significantly impact financial planning and long-term investment goals.
Administrative costs: Penalties also cover administrative expenses associated with processing the early withdrawal.
Rate variability: Penalty rates differ among banks, so it’s essential to review the terms and conditions before committing.
You can also prematurely withdraw your fixed deposit by using our app. Download the Bajaj Finserv app from Play Store/ App Store and use Bajaj Finance Fixed Deposit services on the go.
