Application For Withdrawal of Fixed Deposit 

What is the Withdrawal of FD?

Fixed Deposits fall into two types: Regular FDs and Tax-Saving FDs. Tax-Saving FDs are governed by a mandatory 5-year lock-in, strictly prohibiting premature withdrawal for any reason. The only exception is the death of the primary account holder, allowing nominees/heirs to apply for closure. Conversely, regular FDs offer liquidity and can be prematurely liquidated by submitting a formal withdrawal application to the bank.

Withdrawing an FD upon maturity incurs no charges. However, premature withdrawal of a regular FD attracts a penalty. Banks typically impose a penalty of 0.50% to 1.00%, calculated as a reduction on the interest rate applicable for the period the deposit was held. Note that if the deposit is broken within the first 7 days, banks generally pay no interest whatsoever.

Types of Premature Fixed Deposit Withdrawals

Some banks offer premature FD withdrawals in two ways: 

1. Partial: 

   The interest on the withdrawn amount is reduced (a penalty is applied). The interest rate for the remaining amount in the FD remains unchanged.

2. Complete: 

   The interest rate on the entire deposit amount is reduced (a penalty is applied) for the period the funds were held.

Things to Keep in Mind While Submitting the FD Withdrawal Application

There are a few things you need to keep in mind while submitting a fixed deposit withdrawal application:

• Required FD Details: Ensure you have readily available all relevant information, including your FD account number, the principal amount, the original FD opening date, and the maturity date.
• Credit Account Details: Have the correct savings account or current account number where you want to receive the liquidated funds. This is crucial for crediting the amount.
• Original FD Instrument: The bank will require you to submit the original fixed deposit receipt or bond. This is the primary proof of the deposit.
• Handling a Lost FDR: If the original Fixed Deposit Receipt is misplaced, you must notify the bank formally in writing. The bank will then require you to sign an indemnity bond to proceed with either issuing a duplicate receipt or processing the closure.
• Reference Documents: Some banks may request the advice letter or documentation received at the time of opening the fixed deposit to verify the original terms.
• Supporting Documents: For withdrawing a regular FD, banks usually do not require supporting documents. You just need to pay the penalty. However, they might require documents in specific cases. 
• Financial Planning Tool: While not required for the application, it is highly advisable to use an FD calculator to estimate the penalty and the net amount you will receive before making the decision to withdraw prematurely.

How to Withdraw FD Money into Your Bank Account

You can withdraw your fixed deposit either online through your bank's digital channels or offline by visiting a branch.

Online Withdrawal

This method offers convenience via your bank's internet banking portal or mobile app.

• Log in:Access your bank's digital platform.
• Navigate: Go to the Fixed Deposit or 'Service Request' section.
• Initiate: Select the specific FD and choose the "Withdraw" or "Premature Closure" option.
• Confirm: Follow the on-screen prompts to confirm the withdrawal request.

Offline Withdrawal

This requires a visit to your bank or NBFC branch.

• Visit:Go to the branch where your FD is held.
• Form & Documents: Fill out the FD withdrawal/closure form.
• Submit: Submit the completed form along with the Original FD Receipt/Bond and a valid ID proof.
• Process: The bank will process the request and credit the funds to your linked savings account.

Conclusion

The application for withdrawal of a fixed deposit is a straightforward procedural requirement from the bank for releasing your funds. Although FDs are inherently low-risk, premature liquidation carries a high cost, resulting in a reduced FD interest rate and the application of a bank penalty. To maximize returns and avoid financial loss, it is strongly advised to refrain from withdrawing your fixed deposit prematurely unless it is strictly unavoidable.