premature withdrawal of fixed deposit

How To Partially Withdraw Funds From Fixed Deposit

Fixed Deposit or Term Deposit

A fixed deposit is when you invest your lump sum money for a fixed period at a specified interest rate. When your fixed deposit’s term finishes you receive your invested amount with an interest.

Investing in Fixed deposits is commonly seen as a secure and sought-after investment choice in  India. These investments are desirable due to their fixed rate of interest, and since they are non-market linked, the risk is virtually eliminated. Diversifying portfolios can be achieved by investing in fixed deposits, ensuring returns even during market volatility. However, investors should research and examine their options  before deciding if fixed deposit or any other financial product is suitable for them.

Must Read: Why Is Breaking Fixed Deposit Not A Wise Decision

What is FD in bank?

Popularly known as an FD or term deposit, the investment period for your FD varies from a minimum of 7 days to a maximum of 10 years. The return on your FD may be quarterly, monthly, or annually and will be credited into your account. The interest rate and duration of FD depends on your banking institution. Senior citizens get up to 0.5% higher returns. 

You can withdraw your FD as and when required. However, this can affect the interest earned over the specified period. In case you want to withdraw your FD prematurely, here is how it goes:

Premature Withdrawal of Fixed Deposit

  • You can withdraw your FD upon maturity or prematurely. You may pull out or break your fixed deposit before the term ends.
  • For a minimum period, the banks may not impose penalties. In case of fixed deposit withdrawal before maturity, banks may impose penalty charges of 0.50% to 1.00% on the interest rate on withdrawal of funds.
  • You may or may not have to pay a penalty to the banking institution in case of premature withdrawal of fixed deposit, depending on your account type and the bank you invested in.
  • If you have a tax savings account or a non-withdrawal FD account, withdrawal of funds is not allowed before the term period.
  • Fixed deposit withdrawal before maturity can be claimed by submitting an FD Close Application with the bank.
  • Kotak Mahindra Bank does not charge any interest on fixed deposit withdrawal if it is within seven days from its booking date, and your invested amount will be returned to your bank account.
  • Kotak Mahindra Bank puts up a penalty of 0.50 % on the interest rate only if your deposit is invested for 181 days, and above and the withdrawal is before the term period.

 The FD Withdrawal Application: Things To Keep In Mind

When writing a withdrawal request for a fixed deposit withdrawal before maturity, you need to keep the following in mind:

  • Verify all the information you have mentioned in the letter, especially the bank account numbers.
  • You will need to submit the original fixed deposit bond or receipt to the bank.
  • Describe your situation in the letter, if you have misplaced your original fixed deposit bond or receipt, or if you have a photocopy of the original.
  • If the bank asks for additional proof of the reason for breaking the fixed deposit, please provide them.

Withdrawal Procedure For Offline FDs:

  • First and foremost, you need to request a withdrawal form from the bank where you opened your fixed deposit account.
  • Fill out the withdrawal form with your name, bank account details, PAN, etc., and submit it along with your ID proof, photograph, and deposit certificate.
  • You will receive the amount in your savings account once the bank approves your withdrawal form and documents.

Withdrawal Procedure For Online FDs:

  • Visit your bank's website.
  • By providing the required credentials, you can log into your net banking account.
  • Select the ‘Fixed Deposit’ option.
  • Choose the FD account from which you wish to withdraw funds.
  • You must then choose the premature withdrawal option in your FD account.
  • The premature withdrawal section requires you to select the savings account from which you wish to transfer the funds to your FD account.
  • You are done with your FD withdrawal once you click the submit option. The withdrawn money will be transferred to your account.

Why Break Your FD: Choose An FD Based Credit Card

In the world of financial choices, breaking your Fixed Deposit (FD) can be difficult. But why choose between growth and immediate needs? Here is a solution: opt for an FD-linked credit card from Kotak811. Keep your FD intact while accessing a pre-approved credit limit. No need for premature closures. Experience financial flexibility without compromise. You can seamlessly manage expenses while preserving your FD's benefits. It's the smart way to balance your goals.

Read More: Demystifying Recurring Deposit Accounts (RD)


Due to its fixed returns, fixed deposits are one of the most preferred investments among Indian investors. The term of the fixed deposit can be anything from 7 days to 10 years, depending on your needs. However, you should be aware of the penalty charges if the FD is broken before its maturity date.

Even though fixed deposits are the safest option, if you decide to break them prematurely, you can still suffer losses. Therefore, you should refrain from withdrawing prematurely from your fixed deposit unless it is absolutely necessary.

Popular Searches on Kotak811

Zero Balance Savings Account | Kotak811 Insights | 811 Edge Savings Account | Digital Bank Savings Account | Lifetime Free Credit Card | Apply for Image Debit Card | ActivMoney

This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.