Bajaj Finance FD Premature Withdrawal

What is Bajaj Finance FD Premature Withdrawal?

Bajaj Finance FD premature withdrawal means closing your fixed deposit before its maturity date. It is allowed only after a 3-month lock-in period, except in special cases such as the depositor’s death, critical illness, or verified emergencies, while deposits up to ₹10,000 may be repaid without interest as per policy. If the deposit is withdrawn after 6 months but before maturity, the interest rate will be reduced by 2% from the original rate for the period. If no specific rate is mentioned, the interest will be 3% less than the lowest rate offered before withdrawal. 

So, when you make an early withdrawal, the original Bajaj Finance FD rates no longer apply, and the interest is recalculated after deducting premature withdrawal charges. 

How to Close a Bajaj Finance FD Prematurely?

Closing your FD online through the Bajaj Finance customer portal or app is quick and seamless:

• Use your registered mobile number and OTP to sign in to the Bajaj Finance portal or app.
• There, you may check your information and then open your Service section and proceed to Relations.
• Select Fixed Deposit and select Premature Withdrawal.
• Consider the adjusted FD interest rates, penalty and charges.
• You must input the OTP and press Submit to make your request.
• The final amount will be deposited in your linked bank account after deductions.

Disadvantages of Bajaj Finance FD Premature Withdrawal

Before opting for Bajaj Finance FD premature withdrawal, it's crucial to understand the consequences. It may result in the following disadvantages:

• Effects on Linked credit facilities: If your FD secures a loan or credit facility, then your decision to withdraw the deposit earlier than planned may lead to an alteration in the terms or even the cancellation of the facility, thereby affecting your flexibility of credit.
• Interruption with Financial Objectives: Fixed deposits are mostly associated with financial objectives such as the education of children, the purchase of a house or a retirement fund. When closing an FD, you can experience an imbalance of liquidity.
• Bajaj Finance FD Premature Withdrawal Penalty: Withdrawing your FD beforehand will incur a penalty. The original Bajaj Finance FD rate will not be applicable, but instead, the FD Interest rate will be recalculated for the actual period, resulting in lower returns.

Tax Implications on Bajaj Finance FD Premature Withdrawal

Interest on the premature withdrawal of the Bajaj Finance FD is fully taxed under Income from Other Sources. Section 194A of the Income Tax Act provides that TDS is charged at 10% in case the total interest exceeds ₹50,000 in the case of regular taxpayers and ₹1,00,000 in the case of elderly citizens. The rate of TDS is 20% in case of non-submission of PAN. You are able to reduce the value that is liable to TDS by filing Form 15G or Form 15H at the beginning of a financial year. 

How to Avoid Bajaj Finance FD Premature Withdrawal?

You may consider the following alternatives instead of opting for Bajaj Finance FD premature withdrawal:

• Split the Investment into Smaller FDs: Rather than putting all your investment into one big lump-sum FD, break it down into smaller FDs. As an example, don't put ₹3,00,000 into one FD, instead, create three FDs of ₹1,00,000 each. In case of need for cash, you can close only one FD, and the others can be spared from penalties.
• Keep an Emergency Fund Handy: Prepare a separate emergency fund so you won't need premature FD closure to cover sudden expenses.
• Explore Loans Against FD: Bajaj Finance offers a loan against your FD with certain conditions. Using this, you can address your urgent needs without the risk of your FD earning less interest.
• Utilise Credit Card Against FD: You may also opt for a Bajaj Finance credit card against FD instead of prematurely closing your FD. This way, you can access credit without prematurely redeeming the FD, thereby allowing your investment to continue to earn interest while you meet your immediate financial needs.

Key Takeaways

Bajaj Finance FD premature withdrawal gives the option to access funds early, though penalties and losses in the value of returns apply. Money taken out before the end of 6 months gets no interest, and afterwards, the rate drops by 2-3%. Closing an FD early interrupts one’s financial objectives and might also influence the credit facilities linked to it. The tax implications include TDS on the interest earned, which can be minimised by presenting the appropriate documents. To avoid the penalties of premature withdrawal, plan your FD, make smaller deposits, keep aside cash for emergencies, or go for loans against FD or flexible deposit options.