RBL Bank FD Premature Withdrawal

What is an RBL Bank FD Premature Withdrawal?

RBL Bank FD premature withdrawal refers to closing a fixed deposit before maturity, often due to unexpected financial needs such as medical expenses or urgent commitments. In such situations, the RBL Bank FD interest rates are adjusted based on the period the deposit was held. This means the final interest earned may differ from the originally agreed rate. Tax-saver FDs with RBL Bank cannot be withdrawn before maturity, except in special cases like the account holder’s demise or a court order.

How to Close an RBL Bank FD Prematurely?

If you need to access your fixed deposit before maturity, RBL Bank allows premature withdrawal through two convenient methods: online and offline.

1. Online Method

   You can close your FD early using either RBL’s internet banking or RBL MyBank app:

   Via Net Banking

   • Log in to RBL Bank’s internet banking portal.
   • Go to the ‘Fixed Deposits’ section.
   • Select the FD you wish to close and click on ‘Premature Withdrawal’.
   • Choose the account to receive the proceeds and confirm the request.
   • The withdrawn amount (after recalculation) is credited to your linked savings account.

   Via Mobile App

   • Open the RBL MyBank app and log in.
   • Navigate to the Fixed Deposit section and select ‘Close FD’ or ‘Prematurely Withdraw FD’.
   • Enter your MPIN to authenticate.
   • Select the FD, provide the destination account details, and confirm. Funds will be credited shortly.

2. Offline Method

   If you opened your FD through a branch or don’t use online banking, follow these steps:

   • Visit your nearest RBL Bank branch with proof of a valid ID and an FD receipt.
   • Fill out the FD premature closure request form.
   • Submit the form to the bank officer.
   • After deducting penalties, the bank will process your request and credit the applicable amount to your account.

Disadvantages of RBL Bank FD Premature Withdrawal

Premature withdrawal of fixed deposits from RBL Bank may provide quick access to funds; however, it comes with the following drawbacks:

• Impact on Credit Card Issuance: Premature withdrawal of an RBL Bank fixed deposit may affect your eligibility for an RBL Bank credit card against FD, as the fixed deposit acts as collateral for issuing the card.
• Impact on Financial Planning: Premature withdrawal of an RBL Bank fixed deposit may disrupt long-term financial goals or affect the effectiveness of an individual’s emergency fund strategy.
• Lower Interest Rate: If you withdraw your RBL Bank fixed deposit before maturity, the bank pays a lower interest based on how long the deposit was held, instead of the original interest rate.
• Impact on Loan Eligibility: Premature withdrawal of an RBL Bank fixed deposit can affect your eligibility for loans or overdrafts usually offered against fixed deposits.

Tax Implications on RBL Bank FD Premature Withdrawal

If you withdraw your RBL Bank Fixed Deposit before maturity, the interest is recalculated at a lower rate based on the actual period the deposit was held. This interest is fully taxable and is classified under “Income from Other Sources” as per your income tax slab. As per Section 194A of the Income Tax Act, RBL Bank deducts Tax Deducted at Source (TDS) at 10%. This applies if the total interest earned in a financial year exceeds ₹50,000 for regular individuals and ₹1,00,000 for senior citizens. If PAN is not provided, TDS is deducted at a higher rate of 20%.

How to Avoid RBL Bank FD Premature Withdrawal?

To avoid the need for premature withdrawal of your RBL Bank fixed deposit, consider the following steps:

• Overdraft Against FD: RBL Bank offers overdraft or loan facilities of up to 90% of the fixed deposit amount. This option allows you to meet urgent cash requirements without closing the FD prematurely.
• Build an Emergency Fund: Maintain 3–6 months’ expenses in a liquid savings option to manage unexpected situations without withdrawing your RBL Bank fixed deposit.
• Plan Tenure Wisely: Choose the fixed deposit term with RBL Bank based on your financial goals to avoid the need for premature withdrawal. You can use an FD calculator to select the right tenure and estimate your returns accurately.
• Secured Credit Card: RBL Bank offers a secured credit card against your fixed deposit, allowing you to meet short-term spending needs without withdrawing your FD.
• Opt for the Sweep-Out Facility: RBL Bank’s sweep-out facility lets extra money move from your fixed deposit to your savings account when needed. This way, you get funds during emergencies without closing the entire FD.

Key Takeaways

RBL Bank FD premature withdrawal offers early access to funds before maturity, especially during urgent financial needs. However, it may lead to lower returns, as the FD interest rates are recalculated based on the actual tenure of the deposit. The withdrawal process can be completed online, such as through net banking or the RBL MoBank app, and offline, by visiting the nearest branch. To avoid early closure, it’s advisable to plan your FD tenure wisely, maintain a separate emergency fund, or use facilities like sweep-out or overdraft against your fixed deposit.