Union Bank of India FD Premature Withdrawal

Union Bank of India FD Premature Withdrawal Penalty Charges

Union Bank applies this penalty to retail term deposits opened or renewed on or after 1st April 2020, provided the deposit has completed a minimum tenure of 7 days.

Union Bank of India’s 1.00% premature-closure penalty policy for eligible retail term deposits came into effect on 1st April 2020. The information above is based on the bank’s prevailing guidelines as of 5th September 2026.

How Interest Is Recalculated on Premature FD Closure

Union Bank of India does not use the originally booked rate once a retail deposit is closed before maturity. Interest is calculated using the formula below:

Applicable rate = Lower of [(rate applicable on the date of opening for the actual run period − 1 percentage point) or contracted FD rate]

Here,

• The applicable rate is the rate for the relevant amount slab and period run, as prevailing on the date of deposit.
• The second comparison is the Union Bank of India FD rates at which the deposit was accepted.
• The applicable penalty is 1.00% for eligible Domestic/NRO term deposits below ₹2 crore.

Step-by-Step Calculation Example

Suppose you have booked a Union Bank of India FD for 555 days at 6.55% p.a. and closed it prematurely after 300 days. Assume the applicable rate for 271 to 364 days on the date of booking was 5.60% p.a.

The rate for the completed tenure, 5.60% p.a., is reduced by 1 percentage point to 4.60% p.a. This is compared with the originally contracted rate of 6.55% p.a. Union Bank pays the lower rate, which in this case is 4.60% p.a.

How to Close a Union Bank of India FD Prematurely

Union Bank of India offers two options for premature closure, online and offline, each with a sequence of steps.

Online Channel (Net Banking / Mobile App)

The Union Bank allows its customers to close premature FDs online through the following process:

• Log in: Customers can use their User ID and Password to log in to the Union Bank of India net banking or mobile banking app.
• Navigate to deposits: Click deposit services on the main dashboard menu.
• Select the FD: Select the specific FD that you want to close before the date of maturity.
• Choose premature closure: Select premature closure and enter the sum to be withdrawn.
• Review recalculated interest: Verify the sum of repayment that is indicated before the request.
• Authenticate via OTP: Authenticate using the OTP received on your registered mobile number.

Offline Channel (Branch Visit)

Union Bank of India customers can close a premature FD using the steps:

• Visit the home branch: Visit the branch where you have opened a fixed deposit account.
• Carry the FD receipt: You must carry the original fixed deposit receipt that you received at the time of booking.
• Provide ID proof: Submit valid identity evidence as per KYC requirements.
• Fill the closure form: Fill out the physical premature closure form, which is provided at the counter at the branch.
• Submit for verification: Hand in the documents to the branch officials to be verified and processed.
• Receive credited proceeds: Once processing is finished, the money will be credited to your savings account.

Exceptions and No-Penalty Conditions

Early closure of Union Bank FDs is subject to various terms and exclusions which include:

• Product Exemptions: Flexi Term Deposits, Money Flex Term Deposit Scheme and Recurring Deposits under the Union Monthly Plus Scheme are exempt.
• Bank-Induced Closure: When the bank closes the deposit prematurely by invoking a security deposit, there is no penalty.
• Currency-Specific Exemption: NRE and FCNR deposits are exempt from premature closure penalties (for updated yields, check current Union Bank NRE FD rates). However, premature closure penalty charges do apply to Union Bank NRO deposits.
• Non-Callable and Tax Saver Deposits: Regular FD premature withdrawal is not permitted on either product. Non-callable deposits allow an exception on death, bankruptcy, or a government, regulatory, or court order. For every bank, standard FD premature withdrawal is completely restricted on Non-Callable and Tax Saver Deposits.