Central Bank of India FD Premature Withdrawal

What is the Central Bank of India FD Premature Withdrawal?

Central Bank of India FD premature withdrawal means closing your deposit before it matures. The bank allows this in urgent cases like medical emergencies or other financial needs. For non-callable deposits, premature withdrawal is not allowed. But in special cases like court orders or the account holder’s demise, it may be permitted. In such cases, the deposit is treated as a callable one. Central Bank of India FD rates are then adjusted based on how long the money was actually kept.

How to Close a Central Bank of India FD Prematurely?

You can complete the Central Bank of India premature FD withdrawal process either online or offline.

1. Online Method

   Follow the steps below to close your Central Bank FD online using internet banking or the mobile app:

   • Log in to Internet Banking or Cent Mobile App: Use your credentials to access the Central Bank of India’s online banking platform or Cent mobile app.
   • Go to Fixed Deposit Section: Navigate to the “Fixed Deposit” or “Term Deposit” option in the menu.
   • Select the FD for Closure: Choose the FD account you want to close and click on the “Premature Withdrawal” or “Close FD” option.
   • Confirm the Request: Review the details and confirm your closure request using OTP or transaction password.
   • Receive Funds: The amount (after applicable adjustments) will be credited to your linked savings account.

2. Offline Method

   If you prefer to visit the bank, follow these steps to close your FD offline:

   • Visit the Nearest Branch: Go to your Central Bank of India home branch during working hours.
   • Fill the FD Closure Form: Request and complete the Premature FD Withdrawal form available at the bank.
   • Attach Required Documents: Submit the original FD receipt, identity proof (Aadhaar, PAN), and other KYC documents as needed.
   • Submit to the Bank Officer: Hand over the completed form and documents for verification.
   • Receive the Payment: Once processed, the FD amount (after deductions, if any) is credited to your savings account.

Disadvantages of Central Bank of India FD Premature Withdrawal

The following are key drawbacks to keep in mind before opting for the Central Bank of India FD premature withdrawal:

• Subject to Bank’s Deposit Policy:  Central Bank of India Premature FD withdrawals are governed by the bank’s deposit policy. The rules may vary depending on the type of FD, whether callable or non-callable, and the reason for withdrawal.
• Reduced Interest Earnings: When you withdraw a fixed deposit before maturity, the Central Bank of India recalculates the interest based on the actual holding period. This revised rate is often lower than the originally agreed rate, which means you earn less than expected on your investment.
• Impact on Financial Goals: Central Bank of India FD premature withdrawal can interrupt important financial goals like saving for education, marriage, or retirement. Since fixed deposits are designed for long-term savings, early withdrawal may lead to a loss of compounding and weaken your overall financial plan.
• Restriction on Credit Card Against FD: If your Central Bank of India FD is linked to a credit card, you cannot close it early until all dues are cleared. A No Objection Certificate (NOC) is needed to confirm full repayment, as the FD stays locked as security.
• Impact on Loan: Central Bank of India FD premature withdrawal may affect any existing or planned loan linked to FD, as the fixed deposit is often used as collateral. Closing it early can lead to changes in loan terms or cancellation.

Tax Implications on Central Bank of India FD Premature Withdrawal

If you withdraw your Central Bank of India Fixed Deposit before maturity, the interest is recalculated based on the actual tenure of the deposit. This adjusted interest is fully taxable under “Income from Other Sources” and is taxed as per your income tax slab. As per Section 194A of the Income Tax Act, the Central Bank of India deducts TDS at 10% if the total interest earned in a financial year is more than ₹50,000 for general customers and ₹1,00,000 for senior citizens. However, if your PAN is not linked to the account, TDS will be deducted at a higher rate of 20% as per income tax rules.

How to Avoid Central Bank of India FD Premature Withdrawal?

Here are some smart ways to avoid the Central Bank of India FD premature withdrawal:

• Choose the Right Tenure with a Calculator: Use the Central Bank FD Rates Calculator to pick a deposit duration that suits your savings goals. This handy tool gives you a clear picture of your expected returns.
• Loan Against FD: To avoid premature withdrawal, you can take a loan of up to 90% of your fixed deposit amount with the Central Bank of India. It’s a smart way to access funds while your FD continues to earn interest.
• FD Sweep-out: To avoid premature withdrawal, you can use the sweep-out facility offered by the Central Bank of India. This feature allows the automatic transfer of funds from your fixed deposit to your savings account when needed, giving you easy access to money while still earning interest on the remaining FD balance.
• Credit Card: If you need instant credit, consider applying for a Central Bank of India Credit Card Against FD. This option lets you access funds without going for premature withdrawal, so your fixed deposit stays intact and continues to earn interest.

Key Takeaways

The Central Bank of India allows premature FD withdrawal in case of need, but it may lead to reduced returns. The bank recalculates FD interest rates based on how long the money was kept, and a penalty may apply. Non-callable FDs cannot be withdrawn early unless in special cases. Premature withdrawal can be done through both online and offline modes. To avoid losing out on FD interest rates, consider other options like maintaining an emergency fund, using the sweep-out facility, or taking a loan against your FD.