Slice Small Finance Bank FD Premature Withdrawal

What is Slice Small Finance Bank FD Premature Withdrawal?

Slice Small Finance Bank FD premature withdrawal allows you to close your FD before maturity with certain conditions. The bank, formerly North East Small Finance Bank, offers no interest if you withdraw your FD before 7 days. If withdrawn after 7 days, the Slice Small Finance Bank FD interest rates are recalculated based on the actual duration your money was held in the FD.

For example, if your original interest rate was 8.75%, after the 1% penalty, you will only receive 7.75%. You can only withdraw callable fixed deposits early, whereas non-callable deposits cannot be withdrawn early.

How to Close Slice Small Finance Bank FD Prematurely?

Your Slice Small Finance Bank FD can be withdrawn prematurely, either online or offline, at your convenience.

Online Method

To initiate a premature withdrawal of your FD via NetBanking, follow these steps:

• Access Your NetBanking Portal: Access the Slice Small Finance Bank NetBanking portal using your credentials.
• Navigate to the Deposits Section: Click on the deposits section of your account.
• Select the Fixed Deposit for Withdrawal: Select the Fixed Deposit that you want to withdraw into your bank account.
• Request Premature Withdrawal: Click on premature withdrawal or close fixed deposits.
• Choose the Savings Account: Select the savings account for the amount withdrawn.
• Place the Request: Enter login details and place the request.

Offline Method

To request a premature withdrawal of your FD in person, follow these steps:

• Visit Your Nearest Branch: Go to the closest branch of Slice Small Finance Bank.
• Carry Required Documents: Bring the FD receipt, a valid ID proof, and a passbook or chequebook.
• Request Premature Withdrawal Form: Ask the bank representative to issue the premature FD withdrawal form.
• Fill Out the Form: Enter the necessary information into the form.
• Submit the Form and Documents: Give the bank representative the duly filled form and documents.
• Verification and Credit: Your account will be verified before the amount is credited to your account.

Disadvantages of Slice Small Finance Bank FD Premature Withdrawal

Slice Small Finance Bank FD premature withdrawal involves the following limitations, which you should consider before proceeding with the service:

• Reduction in Compounding Benefits: Fixed deposit interest is compounded over time. Premature withdrawal disrupts this process and results in less accumulated interest in comparison to holding the FD to maturity.
• Impact on Linked Loan: The premature closure of the FD may affect the eligibility of your loan or the conditions of any future loan or overdraft provision.
• Premature charges: Slice Small Finance Bank FD early withdrawal charges may reduce your returns. The penalty usually depends on the tenure and the amount of the deposit held.
• Influence on Financial Planning: Fixed deposits tend to be the subject of long-term financial planning. Early withdrawal may affect your long-term savings plans, including education, house purchase, or retirement.
• Limit on Credit card against FD: If you have pledged the FD to a Slice Small Finance Bank credit card against FD, then you cannot draw it in advance till your FD dues are paid in full. The bank may require an NOC to identify the FD by stating that the FD requires full repayment.

Tax Implications on Slice Small Finance Bank FD Premature Withdrawal

When you withdraw your Slice Small Finance Bank FD early, your interest will be recalculated on the real term the money had been held. The recalculated interest is subject to full taxation as per the Income Tax Act under Income from Other Sources. As per Section 194A of the Income Tax Act, a 10% TDS is deducted on the total interest earned in the financial year as required under prevailing income tax regulations when the amount exceeds ₹50,000 for general taxpayers and ₹1,00,000 for senior citizens. The revised interest after premature withdrawal is also subject to TDS and should be correctly reported in the Income Tax Return during the applicable assessment year.

How to Avoid Slice Small Finance Bank FD Premature Withdrawal?

The following are some of the measures that can be taken to prevent premature withdrawal:

• Periodically revise and check your Savings Plan: Your financial needs can change over time, so you should review your FD and savings plan. Investments must be aligned with your liquidity needs and financial goals, so you do not need to withdraw funds early.
• Make Multiple FDs: Allocate your investment across multiple FDs with varied maturity periods. This approach allows you to withdraw from a single FD without disturbing the remaining deposits while preserving your complete interest benefits throughout the entire tenure period.
• Have an Emergency Fund: You should have an emergency fund in a separate savings account or a liquid mutual fund. In this way, you will not be required to withdraw your FD because of some unforeseen costs.
• Take up Sweep-out or Flexi Deposit: Slice Small Finance Bank provides options like sweep-out FDs linked to your savings account, which automatically withdraw funds when the balance falls to a set level, without any need to close the fixed deposit fully.
• Think Over Borrowing Alternatives: In case of urgency, consider taking a loan against FD facility. With this option, you can still access your funds and retain your FD and continue earning interest.

Key Takeaways

Slice Small Finance Bank FD early withdrawal will give you access to funds when required during an emergency. However, it attracts a penalty of 1% of the prevailing interest rate on the FD and a recalculation of the interest on the actual term of the deposit. To prevent such penalties, it is better to plan your FD tenure and have an emergency fund and options such as sweep-out FDs or a loan against your FD. These options can assist you in covering your immediate financial requirements without an impact on your long-term savings.