Yes Bank FD Premature Withdrawal

What is Yes Bank FD Premature Withdrawal?

Yes Bank FD premature withdrawal means closing your fixed deposit before its maturity. The bank allows this in emergencies like medical or financial needs. Yes Bank FD interest rates are recalculated based on the actual period the deposit was held. If the FD is withdrawn within 7 days of booking, no interest is paid regardless of the amount or tenure.

How to Close a Yes Bank FD Prematurely?

If you need to access your funds before the maturity date, Yes Bank allows premature withdrawal of fixed deposits through online and offline methods. Here’s how you can do it:

1. Online Method

   You can close your FD online if it was booked digitally through Yes Bank NetBanking or the Yes Mobile app.

   • Log in to your account: Access Yes Bank NetBanking or open the Yes Mobile app (IRIS) using your credentials.
   • Go to the Fixed Deposits section: Navigate to the FD section and select the fixed deposit you want to withdraw.
   • Choose ‘Premature Withdrawal’: Click on the option to close or withdraw the FD prematurely.
   • Review and confirm: The system will show the recalculated amount based on revised interest rates. Confirm your request after reviewing.
   • Get credited: The FD amount will be credited to your linked savings account, usually within one working day.

2. Offline Method

   If you prefer in-person service, you can withdraw it by visiting your nearest Yes Bank branch.

   • Visit the branch: Go to any Yes Bank branch with your original FD receipt and a valid photo ID.
   • Fill out the withdrawal form: Request the FD premature withdrawal form from the counter and fill in the required details.
   • Submit documents: Submit the filled form along with your FD receipt and ID proof for verification.
   • Amount gets credited: After processing, the FD amount will be transferred to your linked account, usually within 1–2 working days.

Disadvantages of Yes Bank FD Premature Withdrawal

Withdrawing your Yes Bank fixed deposit before maturity may seem helpful in urgent situations, but it comes with the following drawbacks:

1. Penalty on Interest: 

   In case of a Yes Bank FD premature withdrawal, the interest rate is reduced as a penalty, so you earn less than the original rate. The penalty varies based on the FD amount and tenure. Below is the table showing the applicable penalty:

   FD Amount	Tenure	Penalty
   Below ₹5 crore	Up to 181 days	0.75%
   Below ₹5 crore	182 days or more	1.00%
   ₹5 crore & above	Any tenure	0.25%

   To estimate the exact loss on interest, you can use the FD Premature Withdrawal Penalty Calculator for accurate results.

2. Loss of Compounding: 

   If you withdraw a Yes Bank cumulative FD before maturity, the compounding cycle is interrupted. As a result, you lose the benefit of earning interest on accumulated interest, which reduces your total returns.

3. Ineligibility for Loan Against FD: 

   With a Yes Bank FD premature withdrawal, you can no longer take a loan or overdraft against your fixed deposit. Since the FD acts as collateral, it must remain active to use this facility. Once withdrawn, the collateral is lost, and the loan option is no longer available.

4. Impact Credit Card Against FD: 

   If you withdraw your FD before maturity, your Yes Bank credit card against FD may get cancelled or its limit may be reduced. This is because the FD acts as security for the card, and once it’s withdrawn, the collateral no longer exists.

Tax Implications on Yes Bank FD Premature Withdrawal

If you withdraw your Yes Bank Fixed Deposit before maturity, the interest is recalculated at a lower rate based on how long the FD was actually held. This interest is fully taxable and falls under “Income from Other Sources” as per your income tax slab. Under Section 194A of the Income Tax Act, Yes Bank deducts Tax Deducted at Source (TDS) at 10% if the total interest earned in a financial year exceeds ₹50,000 for regular individuals and ₹1,00,000 for senior citizens. However, if your PAN is not updated with the bank, TDS is deducted at a higher rate of 20%.

How to Avoid Yes Bank FD Premature Withdrawal?

To avoid the need to withdraw your Yes Bank fixed deposit before maturity, consider the following strategies:

• Opt for Loan Against FD: Yes Bank offers the option to avail a loan or overdraft of up to 90% of your fixed deposit amount. This serves as a more efficient solution during financial emergencies.
• Utilise Sweep-out Facility: Yes Bank’s sweep-out facility allows funds to be automatically transferred from your fixed deposit to your savings account when needed.
• Choose Flexible Tenures: With Yes Bank, you can choose FD tenures that match your financial goals and upcoming expenses.
• Opt for Credit Card Against FD: Yes Bank allows customers to apply for a secured credit card against their fixed deposit. This option provides access to credit during urgent situations without disturbing the FD.
• Maintain an Emergency Fund: It’s important to keep 3 to 6 months’ worth of essential expenses in a Yes Bank savings account. This helps you manage unexpected financial needs without having to go for premature withdrawal of your fixed deposit.

Key Takeaways

Yes Bank allows FD premature withdrawal in emergencies, but it reduces your interest earnings. The penalty ranges from 0.25% to 1.00%, and no interest is paid if withdrawn within 7 days. It can be done both online and offline. Early withdrawal may affect benefits like loans or credit cards linked to the FD. To avoid this, maintain an emergency fund, use sweep-out, choose flexible tenures with an FD calculator, and plan ahead to get the full benefit of the applicable FD interest rates.