What kind of penalty will I have to pay for premature withdrawal from bank FD ?
The policy in terms of the penalty can vary across banks.
By OLM Desk
What kind of penalty will I have to pay for premature withdrawal from my bank FD in case of an emergency?
Siddhartha Shrivastava, Lucknow
The policy can vary across banks. Essentially there are two choices. One, you can keep the deposit intact and take a loan against the deposit to meet your requirement. The rate at which the loan will be offered will be higher by one to two per cent than the interest rate on the deposit. There will be a lien on the deposit till you return the loan.
Two, you can opt for premature closure of deposit, in which case the bank will treat your deposit as having been held only for the fractional period and you will earn only the interest applicable for that fractional period. In this case, practices vary in terms of what rate will apply on the deposit. Your penalty is not explicit, but only implicit to the extent of the interest that you have not earned.