Application for Withdrawal of Fixed Deposit

Fixed Deposits are the safest investment instruments. You invest the amount of your choice as the fixed deposit in a lump sum for the set duration and earn interest on it over the term period. Upon maturity, you can withdraw the funds that you have accumulated over the years as your investment returns. The minimum amount and the term duration for the fixed deposit vary from bank to bank.

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You can not withdraw the amount that you have invested till maturity. In case of emergencies, like terminal illness, education, or death, banks allow you to withdraw your funds prematurely. Banks do impose penalties on untimely withdrawals.

What is the Withdrawal of FD?

There are tax-saving and regular fixed deposits. You cannot withdraw tax-saving fixed deposits even in emergencies. You can, however, liquidate your investment in case of some urgent needs. After going through your application to withdraw a fixed deposit, the bank allows you to withdraw the amount you have invested. Some banks charge 0.5% to 1.00% of the interest rate as a penalty on the premature withdrawal. Some banks impose a penalty if you invest the amount back again after the emergencies. If you break the fixed deposit before 7 days of investing in it, the bank will not pay you any interest on that.

Comparison Between
Fixed Deposits, Guaranteed Return Plans & Debt Mutual Fund
Guaranteed Return Plans, Fixed Deposits &
Debt Mutual Fund
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
awards
Still Better than FD’s and Debt Mutual Fund
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
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*For annual premium upto ₹5 Lacs

How to Initiate Withdrawal of FD? 

There are two ways through which you can close the fixed deposits, i.e., through net banking and by visiting the branch. Steps to initiate the withdrawal from the fixed deposit for both modes are as follows:

  1. Through Net Banking:

    • Step 1: Visit the bank's official website.

    • Step 2: Log in with your customer Id.

    • Step 3: Click on the fixed deposit tab.

    • Step 4: Click on the close A/C prematurely tab.

    • Step 5: Fill in all the required details.

    • Step 6: Mention the reasons for closing. 

    • Step 7: Click on confirm tab.

    • Step 8: Insert the OTP or the password you received on your registered mobile number.

    • Step 9: Your fixed deposit will be closed, and money will be deposited into your account. 

  2. Visiting The Branch: 

    • Step 1: Visit the bank's local branch.

    • Step 2: Fill out the fixed deposit closure form and the application for the fixed deposit withdrawal.

    • Step 3: Submit fixed deposit bond and other required documents.

    • Step 4: After verifying all the details, money will be deposited into your account.

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Application for Withdrawal of FD

While submitting the Fixed Deposit closure or the premature withdrawal form, you need to submit the application stating the reason behind your actions and the emergency for that you require the funds. Following is one of the formats of the application for the withdrawal of a fixed deposit.

To,

The Branch Manager, 

(Bank name),

(Branch address in one line/City name),

Date:

From:

Your name,

Address (As mentioned in bank records),

Phone no. (As mentioned in bank records),

Email ID (As mentioned in bank records)

Subject: Request for the premature withdrawal of fixed deposit / Closure of fixed deposit.

Dear Sir/Ma’am,

I am a fixed deposit account holder in your branch. My fixed deposit account number is FD A/C__________ (Mention account number). I had opened fixed deposit on _______ (mention correct date in dd/mm/yyyy format) in the name of _________ (mention the fixed deposit account holder’s name, if it is on your name mention that). My fixed deposit will mature on date __________ (mention correct date in dd/mm/yyyy format). I am writing this letter to you for premature withdrawal of fixed deposit/closure of fixed deposit because _________ (mention the reason here).

I am requesting you to kindly look into the matter and credit the amount to my savings account. My savings bank account number is SB A/C________ (mention savings bank account number). I am hereby enclosing the FD receipt along with all the required documents.

Please do the needful at the earliest.

Thanking you,

(your signature as it is in bank records)

Your name

Annexure:

  • FD receipt

  • KYC documents 

  • Closure form

FD interest rates India have fallen consistently over the last 12 years.
Invest in Plans that offer Guaranteed Returns for over 25 Years

Things to Keep in Mind While Writing the FD Withdrawal Application

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

  • Double-check all the information that you have mentioned in the letter, mainly bank account numbers. 

  • Bank will ask you to submit the original fixed deposit bond or receipt. 

  • If you have misplaced your original fixed deposit bond or receipt, mention that in the letter, or if you have the photocopy of the original, enclose that with the letter. 

  • Some banks need information regarding advice you received at the time of taking the fixed deposit. 

  • Some banks might ask for other supporting documents of the reason for which you are breaking the fixed deposit. Kindly mention those or provide them with documents.

  • It is suggested to use FD calculator before making any FD-related investment decision.

In Conclusion

Fixed deposits earn money for you without any risk. Even though it is the safest route, it can still be a great loss for you if you decide to break it prematurely. The FD interest rate will be a lot lower on your returns. Also, banks levy penalties on prematurely withdrawing from the fixed deposit. Penalty charges can be avoided if you choose to reinvest the money. Therefore, you are advised to refrain from withdrawing prematurely from the fixed deposit unless it is necessary.

FAQ's

  • Can I save tax on fixed deposit returns?

    No, you cannot save tax on fixed deposit returns. Returns will be considered as your income for that financial year. You can invest in the tax savings fixed deposit schemes specially designed to save tax. These tax-saving FDs are usually of the 5-year tenure, and you cannot break or withdraw money from them even in the case of an emergency.
  • Can I break FD in the lock-in period?

    Apart from tax-saving FD, other FDs do not have a lock-in period. If your bank has mentioned a specific lock-in period, you cannot break the FD during that period. Some banks provide a trial period from 7 days to 6 months. You can break the FD during that period without attracting any penalty. However, banks won't be eligible to pay you any interest on your investment during that period.
  • Do I need to provide any referral or guarantee for opening up a fixed deposit account?

    No, since fixed deposits require you to pay the amount in a lump sum, you do not have to provide any referral or guarantee while opening up the account. Your credit score or credit history also will not impact your eligibility to invest in a fixed deposit.
  • What are the different pay-out options available on fixed deposits?

    You can ask for the lump sum payout option at the time of opening of FD. Your bank may directly deposit the money in your account or might provide you with the post-dated cheque. You can also opt for the auto-renewal option of your fixed deposit. Some banks also offer structured payment systems. You can choose from monthly, bi-annually, and annual payments.
  • What is the procedure of withdrawal of/closure of FD if it is opened jointly?

    If FD is opened jointly, then also you need to follow the same procedure for withdrawal/closure, except signatures of both account holders will be required.

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