How to Submit Application for FD Withdrawal  

What is a Premature Withdrawal of Fixed Deposit?

Fixed Deposits are of two types: Regular FDs and Tax-Saving FDs. Tax-Saving FDs come with a mandatory 5-year lock-in period, which means you cannot withdraw the money early. The only exception is if the account holder passes away, in which case the nominee or legal heir can apply to close the FD. Regular FDs, on the other hand, are more flexible and can be withdrawn early by simply submitting a withdrawal application to the bank.

If you withdraw your FD after it matures, there are no charges. But if you withdraw a regular FD before it matures, which is known as premature FD withdrawal, the fd breaking charges lies between 0.50% and 1.00%. The amount is deducted from the interest rate you would have otherwise earned for the period you kept the money in the FD. Also keep in mind that if you break the FD within the first 7 days of opening it, most banks will not pay you any interest at all.

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   The interest on the withdrawn amount is reduced (a penalty is applied).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 an FD 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.