Bank of Maharashtra FD Premature Withdrawal

What is Bank of Maharashtra FD Premature Withdrawal?

Bank of Maharashtra FD premature withdrawal means the closure of the fixed deposit account before the stipulated maturity period. This facility is permitted by the bank according to its policies based on RBI guidelines. The depositor should pay the interest cutoff and a penalty for premature withdrawal. In the case of a deposit of up to one year, interest will be charged at the current rate on the actual holding period. The effects on the returns should be calculated accurately by checking the current Bank of Maharashtra FD rates on the date of withdrawal of the money. If the premature withdrawal is done within seven days, the depositor gets the payout without any penalty or interest.

How to Close a Bank of Maharashtra FD Prematurely?

Bank of Maharashtra provides multiple channels to facilitate premature FD closure for customer convenience. You can choose to initiate the process online through the mobile app or Internet Banking portal, or offline by visiting the nearest branch.

1. Online Method

   Customers with access to digital banking services can easily initiate a Bank of Maharashtra FD premature withdrawal using either the mobile application or Internet Banking.

   Via Internet Banking:

   • Log in to the Bank of Maharashtra Internet Banking portal using your credentials.
   • Go to the “Personal” tab on the dashboard.
   • Click on “Term Deposits” to view your existing FDs.
   • Select the FD you wish to close.
   • Choose the option for premature withdrawal or closure.
   • Follow the on-screen steps to authenticate and complete the process.

   Via Mobile App (MahaMobile):

   • Log in to the Bank of Maharashtra mobile application.
   • Navigate to the ‘Term Deposit’ section.
   • Select the fixed deposit account you wish to close.
   • Tap the option to close or prematurely withdraw the FD.
   • Follow the on-screen instructions and confirm the request.

2. Offline Method

   Customers who prefer in-person services or do not use digital platforms can close their FD by visiting any Bank of Maharashtra branch:

   • Visit the nearest branch of Bank of Maharashtra.
   • Inform the bank official about your intention to close the fixed deposit prematurely.
   • Provide necessary details such as the FD receipt or account number.
   • Fill out the required FD closure form provided by the branch.
   • Submit valid identity proof (e.g., PAN card, Aadhaar).
   • Once verified, the bank will process the request and credit the proceeds to your linked savings account, typically within one working day.

Disadvantages of Bank of Maharashtra FD Premature Withdrawal

Premature withdrawal of a Bank of Maharashtra fixed deposit can offer funds in an emergency situation, but it also comes with certain drawbacks. These include:

1. Bank of Maharashtra FD Premature Withdrawal Penalty: 

   When a fixed deposit is withdrawn before its maturity, Bank of Maharashtra applies revised FD interest rates based on the actual tenure completed and, in some cases, a penalty:

   Deposit Tenure	Interest Rate Treatment	Penalty
   Less than 7 days	No interest payable	Not applicable
   Up to 1 year	Interest paid at the applicable rate for the actual tenure	No penalty
   Above 1 year	Interest paid at the applicable rate for the actual tenure	1% penalty on interest rate

   You can get a rough idea of your exact penalty with the FD premature withdrawal penalty calculator.

2. Reduced Interest Earnings: 

   The FD does not earn the original agreed-upon rate. Instead, the bank pays a lower rate based on how long the deposit was held and deducts the penalty if applicable. This lowers the total payout, especially for long-term FDs. For example, a deposit originally booked for 5 years but withdrawn after 13 months would earn interest applicable for that shorter tenure, minus a 1% penalty.

3. Processing Delays: 

   Although Bank of Maharashtra typically processes FD premature withdrawal requests within one working day, occasional delays may occur due to non-working days, system verification, or branch-level procedures. Such delays can affect timely fund availability during urgent situations, especially when done offline.

4. Restriction on Loan Against FD: 

   If the FD is pledged for a loan, early withdrawal is not allowed until the loan is cleared. A No Objection Certificate (NOC) from the loan department is required before proceeding.

5. Restriction on Credit Card Against FD: 

   If the FD is linked to a credit card, it cannot be withdrawn before clearing all dues. You must obtain an NOC from the credit card division before the FD can be closed.

Tax Implications on Bank of Maharashtra FD Premature Withdrawal

The interest earned on a Fixed Deposit (FD) closed prematurely with the Bank of Maharashtra is fully taxable under the heading “Income from Other Sources.” As per Section 194A of the Income Tax Act, the bank deducts Tax Deducted at Source (TDS) if the total interest earned in a financial year exceeds ₹50,000 for regular individuals and ₹1,00,000 for senior citizens. In cases where the depositor has not provided a valid PAN, TDS is deducted at a higher rate of 20%. It is important to report the revised interest income accurately while filing income tax returns, even if the FD is withdrawn before maturity.

How to Avoid Bank of Maharashtra FD Premature Withdrawal?

You can minimise the need for the Bank of Maharashtra's premature FD closure by carefully planning your finances. Here are some effective strategies:

• Choose the Right Tenure: Match your Bank of Maharashtra FD tenure with your financial goals. Avoid very long tenures if you anticipate short-term needs.
• Create Multiple FDs: Instead of investing a lump sum in one FD, divide it into smaller deposits with different tenures. This allows partial liquidity without withdrawing the full FD.
• Maintain a Separate Emergency Fund: Keep emergency funds in liquid assets or a savings account to avoid affecting your fixed deposits.
• Use Sweep-Out Options: Opt for sweep-out facilities where only the required amount is withdrawn without closing the entire FD.
• Consider Overdraft or Credit Card Against FD: You could opt for overdraft facilities or a Bank of Maharashtra credit card against FD. This lets you access funds without early closure.

Key Takeaways

Bank of Maharashtra FD premature withdrawal is allowed in case of any financial emergency, but this requires the bank to recalculate the interest and levy a penalty. On deposits beyond one year, the bank has lowered the rate of interest applicable by 1%, and no interest will be charged if the withdrawal is made by the customer within seven days. The procedure can occur online and offline, and typically takes a day to conclude. When the FD is associated with a loan or a credit card, no premature withdrawal is allowed until the dues are paid off and a No Objection Certificate (NOC) is obtained.