What is the premature withdrawal penalty on a Bank of India FD?

0.50% is the penalty on deposits under â¹5 lakh withdrawn before completing 12 months, and this penalty disappears entirely once the same deposit crosses 12 months. Deposits of â¹5 lakh and above pay a flat 1.00%, whether the deposit runs for one month or several years.

Does the Bank of India penalty change once a small deposit crosses 12 months?

Yes, for deposits under â¹5 lakh specifically. 12 months is the point at which the 0.50% penalty disappears entirely for these smaller deposits. Deposits of â¹5 lakh and above do not get this benefit, since their 1.00% penalty applies regardless of how long the deposit was held.

What happens to an NRE deposit at Bank of India closed before 12 months?

No interest at all is paid on an NRE term deposit closed before it reaches the minimum stipulated maturity, which currently stands at 12 months. Because there is no interest to reduce in this case, the standard penalty percentage effectively does not apply.

Can a Bank of India Star Sunidhi Tax Saving FD be closed early?

No. This scheme carries a lock-in period reported at 5 to 10 years, and premature withdrawal is not permitted during that window under standard tax-saver terms. This detail comes from secondary sources rather than a page confirmed directly on Bank of India's own site.

Is the Bank of India penalty waived if I renew into a longer deposit?

Yes. The Bank of India allows its customers to have premature closure without penalty when the deposit is closed specifically for renewal into another term deposit with a tenure longer than the remaining period of the original contract. The renewed deposit must continue with the bank for the required period.

How is interest calculated if I close my Bank of India FD prematurely?

The applicable rate is the lower of the rate applicable on the date of deposit for the actual period held and the contracted rate, after applying the applicable penalty. Bank of India reduces the base rate by 0.50% or 1.00%, based on the deposit amount and whether the deposit has completed 12 months. The reduced FD rate is applied thereafter.

Bank of India FD Premature Withdrawal

premature closure of your FD attracts a penalty, which reduces the effective interest rate. Bank of India decides the penalty based on both the deposit amount and the actual tenure completed. Deposits below ₹5 lakh attract no penalty after 12 months, while withdrawals before 12 months has a 0.50% penalty. Deposits of ₹5 lakh and above pay a flat 1.00% regardless of tenure completed. And the Tax Saving FD does not allow premature withdrawal.

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Bank of India FD Premature Withdrawal Penalty Charges

These rates apply to Domestic and NRO term deposits, as per Bank of India’s published penalty schedule. NRE deposits follow a separate rule, outlined below.

Deposit Amount	Withdrawn Before Completing 12 Months	Withdrawn After Completing 12 Months
Less than ₹5 Lakh	0.50%	Nil, no penalty
₹5 Lakh and above	1.00%	1.00%

*Bank of India FD premature closure rules and penalty rates updated as per prevailing guidelines as of 3rd September 2026.

How Interest Is Recalculated on Premature FD Closure

Bank of India deducts penalty directly from the rate applicable to the period the deposit actually remained with the bank. This differs from a few other public sector banks: Bank of India's own published schedule does not describe a separate comparison against the originally contracted rate. It simply states the deduction that applies once the deposit is closed prematurely.

Applicable Interest Rate = Lower of the rate applicable for the actual period held or the contracted rate − applicable penalty (0.50% or 1.00%)

Step-by-Step Calculation Example

Take a domestic Bank of India FD of ₹3 lakh, booked under tenure of 270 days to less than 1 Year at 5.50% p.a., and closed after completing 200 days.

Parameter	Value
Deposit Amount	₹3,00,000
Tenure Completed	180 days to 210 days
Rate applicable for the actual period held (200 days)	5.50% p.a.
Applicable Penalty (deposit under ₹5 lakh, withdrawn before 12 months)	0.50%

The applicable rate for the actual 200-day holding period is reduced by the 0.50% penalty, since the deposit falls under ₹5 lakh and withdrawn before completing 12 months. Bank of India pays 5.00% p.a. If the deposit had completed more than 12 months before closure, no penalty would apply, and interest would be paid at the applicable Bank of India FD rate for the full period.

How to Close a Bank of India FD Prematurely

Two methods are available for FD premature withdrawal. The offline process follows Bank of India’s branch procedure, while the online process is based on the standard net banking or through mobile app.

Online Channel (Net Banking / Mobile App)

You can request premature closure of your Bank of India Fixed Deposit online with these steps:

Log in: Access Bank of India's net banking portal or Star Connect mobile app using your credentials.
Navigate to deposits: Go to the Term Deposit or Fixed Deposit section of the dashboard.
Select the FD: Choose the specific deposit account you want to close before maturity.
Request premature closure: Select the closure option and confirm the amount to be withdrawn.
Review recalculated interest: Check the revised payout figure before confirming the transaction.
Authenticate and submit: Confirm using OTP, and proceeds are credited to your linked account.

Offline Channel (Branch Visit)

You can also request premature closure of your Bank of India Fixed Deposit by visiting the branch and following these steps:

Visit the branch: Walk into your Bank of India branch and inform an official of the closure.
Collect the termination form: A bank official will provide the early termination form to complete.
Fill in the details: Ensure all fields on the form are filled in correctly.
Complete KYC: Provide fresh KYC details if requested by the branch official.
Submit documents: Hand over the original FD certificate along with a valid ID proof.
Receive proceeds: Once validated, the principal and accrued interest, after any deduction, are credited.

Exceptions and No-Penalty Conditions

A handful of scenarios sit outside Bank of India's standard penalty structure, though not all are confirmed from the bank's own published page.

Premature Renewal: No penalty is charged when a term deposit is prematurely closed for renewal into another Bank of India term deposit, provided the renewed deposit remains with the bank for a period longer than the remaining tenure of the original deposit.
Death of the Depositor: No premature withdrawal penalty is charged when the term deposit is closed before maturity due to the depositor’s death. The eligible proceeds are paid to the nominee or legal heir as per the applicable bank procedures.
NRE Deposits Under 12 Months: No interest at all is payable if an NRE term deposit is closed before completing the minimum stipulated maturity, currently 12 months. Since no interest exists to reduce, no separate penalty applies in this case.
Tax Saving FD: The Star Sunidhi Tax Saving Scheme carries a lock-in of 5 to 10 years. Premature withdrawal is not permitted, based on standard tax-saver terms reported across sources rather than a page found directly on Bank of India's site.

Non-Withdrawable Deposits vs Withdrawable Deposits at Bank of India

Bank of India offers both withdrawable and non-withdrawable term deposits, subject to applicable terms. Withdrawable deposits can be closed before maturity, with the applicable premature-withdrawal penalty. Non-withdrawable deposits generally cannot be prematurely closed at the depositor’s request, except in specified circumstances such as death, bankruptcy or regulatory directions.

FAQs

What is the premature withdrawal penalty on a Bank of India FD?

0.50% is the penalty on deposits under ₹5 lakh withdrawn before completing 12 months, and this penalty disappears entirely once the same deposit crosses 12 months. Deposits of ₹5 lakh and above pay a flat 1.00%, whether the deposit runs for one month or several years.
Does the Bank of India penalty change once a small deposit crosses 12 months?

Yes, for deposits under ₹5 lakh specifically. 12 months is the point at which the 0.50% penalty disappears entirely for these smaller deposits. Deposits of ₹5 lakh and above do not get this benefit, since their 1.00% penalty applies regardless of how long the deposit was held.
What happens to an NRE deposit at Bank of India closed before 12 months?

No interest at all is paid on an NRE term deposit closed before it reaches the minimum stipulated maturity, which currently stands at 12 months. Because there is no interest to reduce in this case, the standard penalty percentage effectively does not apply.
Can a Bank of India Star Sunidhi Tax Saving FD be closed early?

No. This scheme carries a lock-in period reported at 5 to 10 years, and premature withdrawal is not permitted during that window under standard tax-saver terms. This detail comes from secondary sources rather than a page confirmed directly on Bank of India's own site.
Is the Bank of India penalty waived if I renew into a longer deposit?

Yes. The Bank of India allows its customers to have premature closure without penalty when the deposit is closed specifically for renewal into another term deposit with a tenure longer than the remaining period of the original contract. The renewed deposit must continue with the bank for the required period.
Does Bank of India compare the completed tenure rate against the contracted rate, like some other banks?

Not according to the bank's own published penalty schedule. Bank of India states a flat percentage deduction, 0.50% or 1.00%, from the rate applicable to the period the deposit actually ran. There is no stated comparison against the originally contracted rate, unlike some other public sector banks.
How is interest calculated if I close my Bank of India FD prematurely?

The applicable rate is the lower of the rate applicable on the date of deposit for the actual period held and the contracted rate, after applying the applicable penalty. Bank of India reduces the base rate by 0.50% or 1.00%, based on the deposit amount and whether the deposit has completed 12 months. The reduced FD rate is applied thereafter.