UCO Bank FD Premature Withdrawal

What is UCO Bank FD Premature Withdrawal?

UCO Bank FD Premature Withdrawal means closing a fixed deposit account before its planned maturity date. Customers can request early withdrawal either online or by visiting a branch. In such cases, the interest is recalculated based on the actual number of days the deposit was held. The applicable UCO Bank FD rates will be the lower of the rate on the original date of deposit or the rate on the date of withdrawal, after applying the relevant penalty.

How to Close UCO Bank FD Prematurely?

UCO Bank FD premature withdrawal can be done via both online and offline channels. Here's how the process works:

1. Online Method

   Customers having access to digital banking services can easily start a UCO Bank FD premature withdrawal through Internet Banking or the mobile app.

   • Log in to UCO Bank's Internet Banking platform or mobile app (UCO mBanking Plus).
   • Navigate to the FD section to view your active deposits.
   • Select the FD you wish to close.
   • Click on ‘Premature Withdrawal’.
   • Verify the details, including your savings account for credit.
   • Upon confirmation, the maturity-adjusted amount is typically credited on the same day.

2. Offline Method

   Customers who would rather deal with someone in person can close their FD by going to any UCO Bank branch:

   • Visit the nearest UCO Bank branch.
   • Inform the staff of your intent to close the FD prematurely.
   • Fill in the FD closure form provided at the branch.
   • Submit KYC documents (PAN, Aadhaar, etc.).
   • Provide the original FD certificate or receipt.
   • The bank will process your request, and the maturity-adjusted amount is generally credited to your linked savings account within 24 to 48 hours.

Disadvantages of UCO Bank FD Premature Withdrawal

Although premature FD closure can be helpful in times of need, it comes with certain financial downsides:

1. Penalty Charges:

   UCO Bank levies a penalty on the FD interest rates payable, depending on the amount of the deposit at the time of premature closure:

   Deposit Amount	UCO Bank FD Premature Withdrawal Penalty
   Less than ₹15 lakh	1% less than the applicable interest rate for the period the deposit was held
   ₹15 lakh to less than ₹1 crore	1% less than the applicable interest rate, whichever is lower (original or prevailing)
   ₹1 crore and above	2% less than the applicable rate as on the date of deposit or the current rate at the time of closure

   You can get an idea of your exact penalty with the FD premature withdrawal penalty calculator.

2. Reduced Interest Earnings:

   The interest on a prematurely closed FD is recalculated at the rate applicable for the actual tenure the deposit remained with the bank. After applying the relevant penalty (1% or 2%), the effective interest earnings are significantly reduced.

3. Processing Delays:

   While online premature withdrawals are usually processed on the same day, offline requests may take up to 48 hours. Delays may occur due to public holidays, documentation errors, or joint account procedures.

4. Restrictions on Linked Credit Facilities:

   If your UCO Bank FD is pledged as collateral for a loan, the deposit cannot be withdrawn prematurely unless all outstanding dues are settled. The bank will require a No Objection Certificate (NOC) before releasing the FD from lien.

Tax Implications on UCO Bank FD Premature Withdrawal

Interest earned on a prematurely closed FD is fully taxable under “Income from Other Sources.” UCO Bank deducts TDS under Section 194A of the Income Tax Act if interest exceeds ₹50,000 for regular individuals or ₹1,00,000 for senior citizens in a financial year. In the absence of a valid PAN, the Tax Deducted at Source (TDS) rate increases to 20%. The adjusted interest amount must be declared appropriately when filing income tax returns.

How to Avoid UCO Bank FD Premature Withdrawal?

Avoiding premature withdrawal helps you retain full interest earnings and avoid penalties. Here are some smart strategies:

• Choose the Right Tenure: Select a UCO Bank FD tenure that aligns with your short- and long-term goals to avoid needing early access to funds.
• Create Multiple FDs with UCO Bank: Split your total investment into multiple FDs with varying maturity periods. This allows partial access without closing the entire deposit.
• Maintain a Separate Emergency Fund: Keep sufficient liquid funds in a savings account or money market instrument to meet unforeseen expenses.
• Use Sweep-Out Options: Opt for sweep-out FDs where surplus balances in your savings account are automatically converted into FDs. This allows you to access only the amount needed.

Key Takeaways

The UCO Bank FD can be prematurely withdrawn online and offline in an emergency case of financial need. However, such withdrawals are subject to a penalty ranging from 1% to 2% of the applicable interest rate. The bank recalculates interest based on the actual tenure completed, and any excess interest already paid is adjusted accordingly. If the FD is linked to a loan, the loan must be cleared before initiating premature closure. To avoid penalties, customers are advised to plan tenures strategically, maintain emergency funds, or use options like sweep-out facilities and overdraft against FD.