Fixed Deposit Rules: If you also break the FD of Rs 1 lakh before time, then how much money will the bank return to you… Let us know some important rules related to interest and penalty in this news.
Lakhs of people in the country prefer to get bank FD for safe and assured returns. Amid rising interest rates, banks have also increased interest rates on fixed deposits. Since FD is made for a fixed period of 1 year or more, but when there is need of money, many customers break the FD in between. In such a situation, they get less interest and also have to pay penalty on it.
If you have made an FD in any bank and want to close it before completion, then you will not get the interest on fixed deposit which was told to you when you made the FD.
Actually, banks deduct interest on premature FD withdrawal and also impose penalty on the remaining interest received. The rules of each bank may be different regarding the provisions related to interest and penalty.
According to the rules of SBI, the country’s largest government bank, if an FD is broken before maturity, the interest is deducted by up to 1%, and a penalty is also charged on the interest received on it.
If you make an FD up to Rs 5 lakh in State Bank of India and break it before maturity, then you have to pay a penalty of 0.50%. Whereas, if the FD is more than Rs 5 lakh and less than Rs 1 crore then the penalty is 1%.
Suppose you have made an FD of Rs 1 lakh for a period of 1 year, on which you will get interest at the rate of 6 percent. If you close your FD before 1 year, you will get only 5% interest. Apart from this, a deduction of 0.50% will also be made as penalty on the interest received. In this way you will suffer double loss and will get interest only at the rate of 4.50 percent.
Since money can be needed at any time in life, the money deposited in banks has to be withdrawn in case of emergency. But during this period, customers can adopt two methods to avoid interest related losses. First of all, do not make FD of the entire amount at once and make several fixed deposits of small amounts or make FD of short duration. If you want, you can also take loan against FD.
