DCB Bank FD Premature Withdrawal

What is DCB Bank FD Premature Withdrawal?

A DCB Bank FD premature withdrawal means closing your fixed deposit before its scheduled maturity date. This is usually done to meet urgent financial needs like medical bills, business costs, or personal emergencies. In such cases, the DCB Bank FD rates are recalculated based on how long the FD was actually held, and a penalty is deducted from the applicable rate.

How to Close DCB Bank FD Prematurely?

DCB Bank allows easy premature FD withdrawals through both online (Net Banking, Mobile App) and offline (branch visit) modes. Here's how you can proceed with the suitable option:

1. Online Method

   If you prefer to avoid paperwork and close the FD from the comfort of your home, then there are two digital options available, Net Banking and DCB Bank Mobile Banking.

   Net Banking

   • Log into DCB Net Banking: Access the DCB Bank's official Net Banking portal and enter your User ID and password to log in.
   • Navigate to Term Deposit: From the dashboard, go to the section labelled "Deposits" or "Term Deposits."
   • Request Premature Closure: Locate the FD you wish to close and click on the "Premature Closure" link.
   • Verify and Confirm: Enter the OTP that has been sent to your registered mobile number or give your transaction password to confirm the request.
   • Amount Credited: The final FD amount will be credited to your linked savings account after recalculating FD interest rates for the actual tenure and deducting the applicable penalty.

   Mobile Banking App:

   • Open the App: Launch the DCB Bank Mobile Banking App on your smartphone and log in with your MPIN or biometrics.
   • Navigate to Fixed Deposits: Tap Deposits, then choose Fixed Deposits.
   • Select Your FD: Select the FD you want to be closed prematurely from the list of active FDs.
   • Request Premature Closure: Tap the "Premature Closure" option and follow the on-screen instructions.
   • Authenticate & Complete: Confirm with an OTP or app PIN. The request will be processed, and the adjusted FD amount shall be deposited into your linked savings account.

2. Offline Method

   If you prefer the traditional method, you can have your FD closed at the nearest DCB Bank branch.

   • Go to the Branch: Visit the nearest DCB Bank branch during banking hours.
   • Documents for ID proof: Carry a government-issued ID, such as a PAN card, Aadhaar card, or driving license, for identity verification.
   • Ask for the Closure Form: Ask the bank executive for the Fixed Deposit Premature Closure Form.
   • Fill Out and Submit the Form: Enter your FD account details and sign the form. Please submit it along with a copy of your ID proof.
   • Bank Processing: The bank officer will verify your request and close the FD, crediting the adjusted amount to your linked savings account after applying interest recalculations and DCB Bank FD premature withdrawal charges.

Disadvantages of DCB Bank FD Premature Withdrawal

Before deciding to close your fixed deposit, it’s important to consider the possible downsides. Here are the key disadvantages:

1. Reduced Interest Earnings: 

   When you close your DCB Bank FD before maturity, the interest is recalculated based on the actual number of days the deposit was held. A penalty is then deducted from the applicable interest rate. This penalty varies depending on the deposit amount:

   Deposit Amount	Penalty Deducted from Applicable Rate
   Less than ₹3 crore (withdrawn within 14 days)	0.50%
   ₹3 crore and above (withdrawn within 30 days)	2.00%

   To estimate how much interest you might lose, use the FD Premature Withdrawal Penalty Calculator. It helps you understand the revised returns after applying the penalty and revised tenure-based rate.

2. Restrictions on Credit Card-Linked FDs:

   If your FD is pledged for a DCB Bank credit card against FD, you cannot close it unless all dues are cleared and a No Objection Certificate (NOC) is issued. 

3. FD Issue as Loan Security: 

   DCB Bank will not allow the premature withdrawal of an FD used as loan security until the loan is duly repaid or settled. The client may lose considerable financial flexibility. 

Tax Implications on DCB Bank FD Premature Withdrawal

In case of premature withdrawal of a DCB Bank fixed deposit, the interest is recalculated based on the actual period the deposit was held. This interest is fully taxable and must be reported under "Income from Other Sources" in your income tax return.

Under Section 194A of the Income Tax Act, DCB Bank deducts Tax Deducted at Source (TDS) at 10% if the total interest earned in a financial year exceeds ₹50,000 for general depositors and ₹1,00,000 for senior citizens. If a valid PAN is not provided, TDS is deducted at 20%. You can avoid TDS deduction by submitting Form 15G (for non-senior citizens) or Form 15H (for senior citizens), provided your total taxable income is below the exemption limit.

How to Avoid DCB Bank FD Premature Withdrawal?

Some of the methods are effective for liquidity management without attracting the DCB Bank FD premature withdrawal charges:

• Loan Against FD: DCB Bank offers loans of up to 80% against the value of the FD with quick disbursement without the need for income proof. 
• FD Laddering: Divide your deposit into multiple accounts with staggered maturity dates for periodic withdrawals.
• Sweep-out Facility: DCB Bank links your FD to your savings account, allowing surplus funds to be automatically transferred for better liquidity and interest management.
• Emergency Fund: Set aside a chunk of your capital in a liquid or short-term FD to meet any eventualities.
• Credit Card Against FD: A DCB Bank credit card backed by your FD lets you manage short-term expenses while your deposit continues to earn interest.

Key Takeaways

DCB Bank allows premature closure of fixed deposits through both online and offline modes. However, a penalty ranging from 0.5% to 2% is deducted from the applicable interest rate, depending on the deposit amount. The interest is recalculated based on the actual tenure of the deposit, and TDS is applicable if the total interest income crosses the threshold limit. To avoid penalties and maintain liquidity, customers can explore options like taking a loan or credit card against the FD, using FD laddering, or opting for sweep-out facilities linked to their savings account.