Fixed Deposit Withdrawal Application – A Comprehensive Guide 2024

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Fixed Deposit (FD) is a secured investment option that allows the investor to gain guaranteed returns. However, there are occasions you may have to withdraw your FD prematurely. But, can we withdraw FD before maturity? Read on to know!    

Among the various means of investment instruments, fixed deposits are regarded as the safest. Hence, most people go ahead with FD when they want to invest their hard-earned money to ensure secured returns.

FD is an investment option where you invest a particular lump sum amount for a specific duration of time to earn returns. The returns can be earned in the form of interest on the amount through the policy duration. The interest rate offered by various banks might differ from one another. The accumulated fund can be withdrawn by the investor at maturity.

If the amount is withdrawn before maturity, there may be penalties imposed by banks. However, if you had to withdraw the FD because of any fatal situation like any terminal disease, education requirement etc., the bank might allow the investor to withdraw the FD by levying a certain penalty.

Let us now take a look at the process of FD withdrawal, in this post. But before that let’s first understand the term withdrawal of FD.

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What is the Fixed Deposit withdrawal application?

FDs are investments that are available for a particular duration. However, they can be withdrawn prematurely to allow the investor to close the FD account prior to its maturity. But, if you go for premature withdrawal of your FD, you will be levied with an FD premature withdrawal penalty of 0.5% to 1% by the bank. The key reason for the penalty is to prevent funds from withdrawal as well as to promote the habit of saving among investors.

When it comes to FD, there are two kinds of funds – tax saving FDs and regular FDs. Money is not permitted to be withdrawn from a tax-saving FD even if there is an emergency. On the other hand, the bank allows you to withdraw money from your regular FD by levying a certain amount of fine.

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Fixed Deposit (FD) Withdrawal Initiation Process

For FD premature withdrawal, there are two processes that you can use – via online mode by using a net banking facility and via offline mode by visiting the branch of your bank.

Here are the steps to follow for each of the modes:

1. Through the process of Net Banking:

  • Go to the official portal of your bank
  • Use your customer ID to log-in
  • Go to the Fixed Deposit tab and click on it
  • Now, click on tab of ‘Close Account prematurely’
  • Here, you must fill the details needed
  • Also, you must mention the reasons for prematurely closing the account
  • Tab the ‘Confirm’ button now
  • You will receive an OTP or a password on your mobile number that is registered with the bank. Insert it
  • Your FD will be closed. You will receive the money back in your account

2. Through the Process of Bank Branch Visit: 

  • Go to a nearest branch of your bank
  • Get the closure form from the bank and fill it. Also fill the application for withdrawal of FD
  • Submit FD bond and any other paper that is required
  • The bank will verify all the details and will deposit the money in your account

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How to Write an Fixed Deposit Withdrawal Application

If you want to withdraw your FD amount prematurely, you will have to submit a closure form and an application saying that you want to end the FD and cite reasons for the same.

Here is how to write an application (sample) for your understanding:

To,

The Branch Manager,

(XYZ Bank),

(ABC Branch, New Delhi),

Date: XXX

From: (Your name),

Address (address and other details should be as per your bank record)

Contact Details

Email ID

Subject: Application for premature withdrawal of FD

Dear Sir/Ma’am,

My name is Satish (write your name) and I have a FD account in your bank. My FD account number is 26754XXXX (Write the A/C No). I had opened a fixed deposit on 27/7/2022 (write the date in the same format) in the name of Satish (write your name if the FD is in your name or the name of the FD account holder). My FD will mature on 27/7/2025 (write the closure date in the same format). I would like to request you to close my FD account prematurely because I need emergency money for a medical treatment of a family member (write your reason).

I hope you would grant my request by looking into the matter and deposit the money in my savings account with number SB A/C 448866XXX (write the account number of your savings bank). I am attaching the FD receipt and other details as required herewith the application.

Hope you will do the needful as soon as possible.

Thanking you,

(Signature that is there in your bank records)

Satish (write your name)

Annexure:

FD receipt

KYC documents

Closure form

Things to Note While Applying for fixed deposit withdrawal 

Here are few things to remember while writing application for FD withdrawal:

  • Check the information offered in the application such as account number and other important details two three times
  • You may have to submit the original FD bond to the bank
  • In case you have lost your original FD bond, you must mention it in the letter. In case you have the photocopy, you can enclose the same with the application
  • Some banks may ask for other information related to the FD
  • Some banks may ask for reasons of closing the FD
  • You must mention them or provide supporting documents for the same

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To Conclude 

FDs are risk-free and safe options of investments to earn money. However, deciding to close the account prematurely can make you lose out on returns. Not only will it lower your interest rate, it will also make the bank levy penalties on your FD. You may decide to reinvest the money to avoid penalty charges. However, it is better to avoid withdrawing money prematurely from your FD unless it is very important.

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FAQs on Fixed Deposit Withdrawal Application

Can I withdraw FD before maturity?

Yes, FDs generally come with a premature withdrawal option which enables the investor to close the account before maturity. However, it levies a penalty on the investor to avail this facility.

How to withdraw FD? 

To withdraw an FD amount, you can either go through the process of net banking or visit a branch of your bank. 

Can I save income tax on FD returns?

No, you cannot save tax on fixed deposit returns. 

Can I break FD in the lock-in period?

Apart from tax-saving FDs, other FDs do not have a lock-in period. However, if your bank mentions a specific duration as the lock-in period, you cannot break the FD during that period. 

What is the procedure of withdrawal/closure of FD if it is opened jointly?

Irrespective of the fact that FD is opened individually or jointly, the investor has to go through the same practice for withdrawal/closure.

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Mar 20, 2023
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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