Equitas Small Finance Bank FD Premature Withdrawal

What is Equitas Small Finance Bank FD Premature Withdrawal?

Equitas Small Finance Bank FD premature withdrawal means closing your fixed deposit before it reaches its maturity period. The facility can be helpful in cases like medical emergencies or unplanned financial requirements. In case the FD is withdrawn in less than 7 days, no interest is given. In the case of withdrawals after 7 days, the interest is recalculated using the actual months in which the funds were held. 

Equitas Small Finance Bank FD rates will also be varied accordingly, and a penalty can be charged on the basis of the tenure and terms of the deposit. The penalty reduces the overall return, as the interest is recalculated based on the actual period the deposit was held. Senior citizens or those above 60 years are not liable for any penalty under premature FD withdrawal.

How to Close Equitas Small Finance Bank FD Prematurely?

You are allowed to request premature withdrawal of your Equitas FD online and offline.

Online Method

With the help of the internet banking portal or mobile app, you can easily request premature withdrawal of your Equitas FD. Here’s How:

• Log in to the Portal/App: Visit the Equitas Small Finance Bank portal or Mobile Banking App using your credentials.
• Navigate to Deposits: Click on the savings account under the section of deposits.
• Select the FD: Choose the FD that you will prematurely close.
• Choose Withdrawal Option: Select the option of Premature Withdrawal to initiate.
• Select Credit Account: Select the account to credit the amount that was withdrawn.
• Authorize and Submit: Enter the password or MPIN of your NetSecure and make a request.

Offline Method

If you prefer offline methods, you can visit your nearest Equitas branch to request a premature withdrawal.

• Visit Branch: Go to the nearest Equitas branch during working hours.
• Carry your Documents: Carry your FD receipt, ID proof, and account passbook or chequebook.
• Fill the Withdrawal Form: Ask and complete the early withdrawal form for FD.
• Submit the Form: Provide the form and documents to the banker.
• Wait for the Approval: Wait till the bank checks your papers and approves your request.
• Fund Credit: After being processed, the amount will be added to your account in two working days.

Disadvantages of Equitas Small Finance Bank FD Premature Withdrawal

Although premature withdrawal might be a good option in case of emergency, it also has its share of drawbacks:

• Less Interest Earnings: Premature withdrawal means less interest earnings, as the FD interest rate is recalculated based on the time the funds were actually on deposit.
• Penalty Charges: Equitas Small Finance Bank FD premature withdrawal charges are charged on premature withdrawal, which decreases the total returns on the FD.
• Impact on Financial Goals: The financial goals with which the fixed deposits are usually used are often long-term, and an early withdrawal will affect your financial planning, postponing your major milestones, such as home purchase or education funding.
• Processing Time: Despite the ability to close the FD in good time, the funds may not be credited immediately due to the processing procedures a branch undertakes.
• Compounding Benefit Losses: Fixed deposits will enable your savings to compound. The early withdrawal will result in a failure to reap this advantage, which will affect the growth of your investment in the long run.
• Limit on Credit Card against FD: In case your FD is secured as pledging collateral to an Equitas Small Finance Bank credit card against FD, it can not be relieved prematurely until all the outstanding debts are paid off. The bank can demand a No Objection Certificate that gives confirmation of the complete repayment.

Tax Implications on Equitas Small Finance Bank FD Premature Withdrawal

The interest on an FD that has been withdrawn prematurely is taxable. It will be charged at a reduced rate, and this will depend on the actual tenure of the FD. As per the Income Tax Act (Section 194A), Tax Deducted at Source (TDS) will be deducted if the amount of interest received on FDs is more than ₹50,000 within a financial year (₹100,000 in the case of senior citizens). The TDS will be deducted at 20% in case you fail to give your PAN.

How to Avoid Equitas Small Finance Bank FD Premature Withdrawal?

You can prevent premature withdrawal of your FD in some ways:

• Select the Right Tenure: Select the tenure with the help of the FD Calculator that meets your financial objectives without the need to withdraw the funds too soon.
• Diversify Your Investments: Divide your investment among more than one FD with different dates of maturity. By doing so, when you require funds, you can withdraw one of the FDs and leave the rest intact.
• Establish an Emergency Fund: It is always worth establishing an Emergency Fund in your savings account so that should unexpected expenses occur, you are not forced to withdraw money from your FD.
• Consider Loan Against FD: It is not wise to withdraw your FD early on; you may take a loan against fixed deposit. The FD will be associated with the loan so that you can access the funds and still earn interest on the deposit.

Key Takeaways

Early withdrawal of your FD in Equitas Small Finance Bank would enable you to access the funds promptly in times of emergencies, but would result in a reduced FD interest rate on the FD and a penalty fee. You should select the appropriate FD tenure and also think about other alternatives, such as loans against FD, so as not to affect your financial plans. These alternatives can assist in supporting your short-term requirements while, at the same time, enabling your savings to increase and attract interest.