Shivalik Small Finance Bank FD Premature Withdrawal

What is Shivalik Small Finance Bank FD Premature Withdrawal?

Shivalik Small Finance Bank FD premature withdrawal means closing a fixed deposit before its originally selected maturity tenure. The bank permits this facility on request for eligible term deposits with certain penalty charges on the final Shivalik Small Finance Bank FD interest rates. Certain schemes, such as Tax Saver Fixed Deposits, come with a fixed 5-year lock-in, and depositors cannot withdraw funds early in usual situations. Bulk deposits of ₹1 crore and above may also be restricted from early closure. Also, depositors are not required to pay any premature penalty on NRE term deposits or on deposits closed in the event of the unfortunate demise of the depositor.

How to Close a Shivalik Bank FD Prematurely?

Premature closure of a Shivalik Small Finance Bank FD can be requested directly with the bank for eligible deposits. Customers may follow the process online or by visiting a branch:

Online Closure Process

You can conveniently initiate premature withdrawal anytime using Shivalik’s secure digital banking platform.

• Log in to Digital Banking: Access your registered Shivalik digital banking account by signing in.
• Access FD Section: Go to the fixed deposit management section.
• Select Deposit: Select the FD marked for closure.
• Initiate Withdrawal: Choose the premature withdrawal request option.
• Review Charges: Check the penalty and interest revision details shown for depositors.
• Confirm Request: Submit the request and confirm with authentication.

Offline Closure Process

Branch visits allow depositors to directly request FD closure with Bank assistance.

• Branch Visit: Visit the nearest Shivalik Small Finance Bank branch.
• Application Request: Request the FD premature withdrawal application form.
• Form Completion: Fill in deposit details and personal identification information.
• Document Submission: Attach a valid identity proof and an FD receipt copy.
• Verification & Submission: Provide the completed form to the branch officer.
• Payout Confirmation: Receive payout confirmation after the Bank verification process.

Disadvantages of Shivalik Bank FD Premature Withdrawal

Shivalik Small Finance Bank FD premature withdrawal provides quick liquidity but comes with several drawbacks. Customers should consider these risks before closing their deposits early:

• Reduced Interest Earnings: Investors are paid interest only for the time their deposit stays active, which can lessen their expected earnings.
• Penal Rate Applies: The Bank may deduct a penal interest rate if investors carry out a premature or partial withdrawal. Investors, therefore, receive reduced interest on their deposit.
• Uncertainty for Interbank Deposits: The bank may refuse partial or premature withdrawals for interbank term deposits, making it harder to plan such investments.
• Lower Predictability of Returns: When interest is recalculated for the real tenure, depositors may receive lower returns than planned. Shivalik Small Finance Bank FD rate is impacted when depositors make premature withdrawals, potentially affecting long-term financial plans.

Tax Implications on FD Premature Withdrawal

Even if a Shivalik FD is withdrawn early, the interest earned is taxed under “Income from Other Sources.” For general depositors below 60 years, a 10% Tax Deducted at Source (TDS) applies if the interest earned exceeds ₹50,000, while for senior citizens, the threshold is ₹1,00,000. Tax Saver FDs with a 5-year lock-in preserve Section 80C benefits and do not allow early withdrawal.

How to Avoid Shivalik Bank FD Premature Withdrawal?

To safeguard your fixed deposit returns, follow these strategies to minimise the need for Shivalik Small Finance Bank premature withdrawal:

• Plan FD Tenure Carefully: Select a deposit period that aligns with your financial needs. Practical planning can help customers avoid premature FD withdrawals when unexpected liquidity is needed.
• Use Alternate Funding Sources: Depositors may choose loans or overdrafts on their deposit instead of taking the FD out early. This ensures the FD remains in place while investors can access funds at any time.
• Track Maturity Notifications: Depositors should monitor SMS, email, or app alerts for updates on FD maturity. Planning ahead helps avoid premature withdrawals caused by unexpected expenses.
• Leverage Reinvestment Options: Reinvesting withdrawn funds into longer-tenure deposits can sometimes waive premature penalties, helping preserve returns while extending the FD duration efficiently.

Key Takeaways

Depositors at Shivalik Small Finance Bank can withdraw regular FDs prematurely. However, the FD interest rate is calculated only for the period the deposit is held and is reduced by a 1% penalty. Tax Saver FDs come with a 5-year lock-in, and Non-Callable FDs usually do not permit early closure for investors. Depositors who place large deposits of ₹1 crore or more may face restrictions on early withdrawal. Partial withdrawals are permitted with the charges that apply, and NRE deposits or closures due to death claims do not face any charge. Investors can limit losses by planning ahead.