Union Bank of India Short Term FD

What is the Union Bank Short Term FD Scheme

Union Bank Short Term FD enables its customers to invest a lump sum in a deposit for a short duration and earn a fixed rate of interest without considering any market changes. The scheme is suitable for conservative investors, senior citizens, and depositors having short term financial goals. Having flexible tenure up to 12 months, Union Bank of India FD rates depend on a specific term chosen and on the type of depositor, which allows an investor to match deposits with future financial commitments.

Union Bank Short Term FD Interest Rates

FD Interest rates for the short term FD in Union Bank of India vary by tenure and depositor type. Below are indicative rates for deposits less than ₹3 crore:

*Union Bank of India FD Interest Rates Effective from 20 August 2025

What Makes Union Bank Short Term FD Attractive

The Union Bank short term FD scheme has various benefits, which are investor-friendly and make it a useful scheme. Below are some of the key features of the FD:

• Loan Against FD: Union Bank of India gives you a loan against FD, which allows you to get the funds without closing the deposit. Loans up to 90% of the value of the FD are provided under terms and conditions.
• Low Minimum Deposit Requirement: You can open an FD with as low as ₹1000, which is low enough to suit investors with all incomes.
• Automatic Fund Transfer and Liquidity: The Union Bank Sweep-in FD will automatically transfer the amount from your savings account to a fixed deposit and will yield better returns. It also enables you to draw the money in case of any emergency.
• Premature Closure Facility: Union Bank of India FD premature withdrawal is allowed under precise terms to provide depositors with the financial flexibility under unforeseen circumstances.

How to Open a Union Bank Short Term FD

Union Bank of India offers customers the convenience of opening short term fixed deposits through both digital platforms and branch visits.

1. Online Application Process

   In order to open a short term Fixed Deposit online, follow the steps as shown below using the online banking facility of Union Bank of India:

   • Log In: Log in to Internet Banking of Union Bank of India or the mobile app with your credentials.
   • Navigate: Go to the Deposits/ Fixed Deposit section of the dashboard.
   • Select FD: Choose the Short-term Fixed Deposit.
   • Enter Details: Key in the deposit, tenure, and the necessary details.
   • Choose Interest Payout: Select the interest payout option: cumulative or periodic.
   • Review & Submit: Check the information and submit to create the FD online.

2. Offline Application Process

   In case you want to open your Fixed Deposit physically, then follow these steps at any branch of Union Bank of India:

   • Visit Branch: Visit your nearest Union Bank of India branch.
   • Fill Form: Collect and complete the Fixed Deposit opening form.
   • Provide Details: State the amount of deposit, tenure and preference of payout.
   • Submit KYC: Provide KYC documents, where necessary.
   • Make Deposit: Place the deposit in cash, cheque or account transfer.
   • Get Receipt: Take the Fixed Deposit Receipt as confirmation.

Who Should Choose Union Bank Short Term FD?

Union Bank short term fixed deposit scheme is suitable for a wide range of investors. These include:

• Depositors with Short Term Surplus Funds: Suitable for those who want to invest temporary idle money for a brief duration.
• Conservative Investors: Suitable for customers who prefer assured and risk-free returns rather than market-linked instruments.
• Senior Citizens: Beneficial for retirees who wish to earn higher interest rates on secure deposits.
• Working Professionals: Useful for employees planning upcoming expenses such as EMIs, insurance premiums, or education-related fees.
• First-Time Investors: A great starting point for beginners due to its low minimum deposit requirement and simple structure.
• Small and Medium Businesses: Helps businesses earn additional returns on surplus funds without affecting day-to-day liquidity.

Taxation Rules for Union Bank Short Term FD

The interest earned on Union Bank short term FDs is taxable as per the Income Tax Act and has to be included in the total taxable income of the depositor. Where the total annual interest on the fixed deposits is more than the stipulated limit, the bank imposes Tax Deducted at Source (TDS) before depositing the interest in the account.

The applicable TDS rate is 10% in case a valid PAN is submitted; otherwise, a higher rate can be charged. The TDS limit is ₹50,000 for common citizens and ₹ 1,00,000 for elderly citizens. However, investors who earn less than taxable income may avoid TDS by filing Form 15G or Form 15H, respectively.

Key Takeaways

The short term FD in the Union Bank of India is a secure investment option with a flexible tenure of between 7 days to 1 year. It also offers competitive interest rates of 3.40% to 6.40% for the regular investors and 3.90% to 6.90% for senior-citizen investors. Having a minimum investment requirement of ₹1000, no maximum investment limit, fixed returns guaranteed, and a premature withdrawal option, it serves investors who require low-risk earnings in the short term.