SBI Bank Fixed Deposit (FD) Premature Withdrawal Penalty Calculator 2023


9 min read

Updated on Oct 25, 2023

A State Bank of India (SBI) Fixed Deposit (FD) is an investment plan that allows guaranteed returns for a fixed duration. This is an interest-bearing investment where you need to invest your money for a fixed period of time at a fixed annual interest rate. 

Overview of SBI FD plan

SBI is an Indian giant in the field of Public Sector Undertaking (PSU) banks offering a wide range of plans and products. The SBI FDs offered by the company are available in varying tenure starting from 7 days to 10 years.

The best thing about FDs is that they are regarded as a safe means of investment. In addition, these plans are considered to be liquid as they can be readily converted to cash. Thus, one can open or close an FD account anytime as per need.  You can either continue an FD plan till it matures or may withdraw the amount before the maturity date if you have a need.

Nevertheless, closing an FD account prematurely is not advisable as you are required to pay a nominal penalty to the insurer as fine if you withdraw the FD before maturity. This is generally done to discourage people from frequently withdrawing FDs and to imbibe the habit of saving in them.

So, let us read in this post about the premature withdrawal penalty calculator and its functioning?

What is Premature Withdrawal of FD?

Premature withdrawal, also known as breaking the FD, is when the invested funds are withdrawn before the maturity period has passed. If the investor needs money right away, they can choose the premature withdrawal option and withdraw the money in FDs.

So, how does the SBI FD premature withdrawal penalty calculator work?

Before taking a look at how the SBI FD premature withdrawal penalty calculator works, let us understand what an SBI FD premature withdrawal penalty calculator is.

An SBI FD premature withdrawal penalty calculator is a tool that calculates the penalty fee to be levied on an FD account if the account holder prematurely withdraws the policy.

Below is the penalty calculation:

  • 0.50% penalty is levied if the FD term deposit amount is up to INR 5 lakh (all tenures) if it is withdrawn prematurely
  • The penalty rises to 1% for all tenures if the term deposit amount is above INR 5 lakh

You must note here that the investor receives no interest on deposits if the FD is invested for a period of less than 7 days. Moreover, the Rate of Interest (ROI) received in that case can be either:

  • within 0.50% – 1% below the contracted rate
  • Or it can be the rate that was fixed at the time of getting the FD investment from SBI, whichever is less.

Let’s take an example here to understand the scenario:

Suppose you opened an FD worth INR 1 Crore with SBI for a term of 2 years at a rate of interest of 5.10% per annum.  Now, after 1 year of the FD, you needed money urgently and wanted to withdraw it prematurely. In this scenario, the penalty that is levied is 1%. Further, you will get the FD amount at a revised rate of interest of 4.00% per annum rather than the original 5.10%.

Let us take a look at the advantages of SBI FD Premature Withdrawal Penalty Calculator now.

Advantages of SBI FD Premature Withdrawal Penalty Calculator

The SBI FD Premature Withdrawal Penalty Calculator is generally used to calculate the financial implications of liquidating an FD account prematurely. So, this calculator evaluates how much money would be paid if you close the FD before the completion of its tenure. The best part is, it can be done in just a click of a button.

Not only this, the use of SBI FD Premature Withdrawal Penalty Calculator makes the process of calculation smooth and instant as compared to the error-prone manual calculations.

Here are some key advantages of using the SBI FD Premature Withdrawal Penalty Calculator:

  • The calculator gives the precise outcome of the penalty amount quite accurately
  • It saves a lot of time of the investor
  • The online calculator is easily accessible all over the internet
  • The calculator helps in comparing options

How is a Penalty Imposed on FD Premature Withdrawal?

The decision to withdraw an FD prematurely calls for a penalty on the interest amount received by the depositor. To impose a penalty on the interest amount, calculations are done. Depending on the bank where you have opened your FD account, the penalty amount may vary.  There are two methods for penalty calculations used by most banks. Let’s take a look:

Let’s assume that the penalty charged by banks on premature withdrawals is 1%. In that case, the interest is calculated as below:

Example 1

Suppose you opened an FD account for 2 years with INR 1 lakh as an investment at an ROI of 7%. Let’s say the ROI for 1 year is 6.5%. Assume that you want to withdraw the FD after the completion of a year because of some emergency. Now, you have earned 7% ROI on the amount for 1 year. However, if you withdraw it prematurely, the bank will recalculate the ROI at a revised rate. For instance, it will calculate ROI at 6.5%. So, the interest you will receive is 6.5% – 1%= 5.5% and not 7%.

Parameters  Details 
Principal Amount INR 1 lakh
Two-year FD interest rate 7 % per annum
Maturity Amount after completion of 1 Year INR 1,07,186
One-year FD interest rate 6.5 % per annum
Effective Interest Rate 6.5 % per annum
Penalty Charges for Premature Withdrawal 1 %
Final Interest Rate to be paid 5.5 % per annum
Amount paid by the Bank at the time of Premature Withdrawal INR 1,05,614

Example 2

Now, let’s take another example. Suppose you invested INR 1 lakh in an FD for 2 years offering an interest rate of 6%. Let’s say at the time of opening the account, the ROI for 1 year was 7%, while the premature withdrawal penalty was 1%. Now, if you withdraw the FD just after a year of buying it, the interest amount will be calculated at a rate of 6%. So, what you will receive as interest is 6% – 1% = 5%. Hence, you will get the interest amount at the rate of 5% as compared to 6% earlier.

Parameters  Details 
Principal Amount INR 1 lakh
The interest rate offered on a Two-year FD 6% per annum
Maturity Amount after completion of 1 Year INR 1,06,136
One-year FD interest rate 7% per annum
Effective Interest Rate 6 % per annum
Penalty Charges for Premature Withdrawal 1 %
Final Interest Rate to be paid 5 % per annum
Amount paid by the Bank at the time of Premature Withdrawal INR 1,05,095

How does the SBI FD Premature Withdrawal Penalty Calculator help?

Though the rate of interest of FDs keeps changing on a regular basis as per the prevalent scenario of interest rate. However, the FDs which are once contracted stayed fixed for the particular term of the deposit.  And in case the depositor plans to make the FD liquid or to redeem the FD before its maturity date, the bank levies a penalty on the investor depending on their policy terms and conditions.

Now, the SBI FD Premature Withdrawal Penalty Calculator is an easy online tool that helps investors to guess the exact amount that needs to be paid as penalty for closing the account prematurely. It further helps them to control the penalty amount that has to be paid as per the premature date when you plan to withdraw the FD.

Moreover, the SBI online FD penalty calculator also provides the investor a platform to regulate the amount of money that he/she has to forego because of premature withdrawal of the FD.

Get a Credit Card against FD to Avoid Premature Withdrawal Penalty?

Normally, investors withdraw FD prematurely to take care of a financial crisis. However, as discussed above, withdrawing FD brings upon losses to the investor in terms of penalty. Rather than withdrawing FD prematurely to manage a financial requirement and losing out on your FD returns, it is better to use an alternative like getting a credit card against FD.

Yes, you can avail of credit cards against FD amounts with a credit limit of up to 80% of the principal amount of FD. You may discuss the same with your bank where you have your FD account to avail of such credit cards.

The credit card will help enhance your credit score and at the same time support you in managing expenses.

Get an FD With No Premature Withdrawal Option

To avoid premature withdrawal of an FD, you may open an FD account that doesn’t allow the investor to close the account prematurely. However, the FDs without premature withdrawal option are generally available for higher amounts, while the rate of interest on such FDs may be low as compared to the FD accounts that allow the option of premature withdrawal.

Below are some banks offering FDs that cannot be closed before maturity:

Bank name  Amount 
HDFC Bank Fixed Deposits INR 5 crore and above
ICICI Bank Fixed Deposits INR 2 crore and above
PNB Uttam Fixed Deposits INR 15 lakhs and above (non-callable)
Standard Chartered Fixed Deposits INR 2 crore and above

SBI Fixed Deposit – Points to Remember for Premature Withdrawal

  • 0.50% is the penalty charged for premature withdrawal by SBI on FD amounts up to INR 5 lakhs irrespective of the term of the FD
  • If the retail FD sum is within INR 5 Lakh to INR 1 crore, a 1% penalty is imposed on all FDs for all tenures
  • If the FD is withdrawn before a period of 7 days, the bank pays no interest on the amount

You can get in touch with SBI customer care at their toll-free number – 1800-425-3800, 1800-11-2211, and toll number 080-26599990 for further details.

What are the disadvantages of Withdrawing FD Prematurely 

A Fixed Deposit is an investment that offers assured returns to the investor over a fixed duration. However, if an investor withdraws the FD before reaching maturity, it may not get them any fruitful benefit.  Here are some of the grounds on which the investor might lose by withdrawing the FD prematurely.

Imposed Penalty – The investor has to pay a penalty imposed by the bank for withdrawing FD prematurely. The penalty is levied on the interest amount earned from the FD and generally ranges from 0.50 % to 1.00 %. Depending on the bank, the penalty may keep changing.

Loss of Interest – If an investor withdraws an FD before maturity, they will not receive the amount as discussed at the time of opening the FD account. This is because closing the FD before maturity calls for a penalty on the interest amount. Hence, you must calculate the penalty while estimating the amount to be earned from your FD that is closed prematurely.

Limits Financial Growth – People normally invest in FDs to earn assured returns. However, withdrawing the FD prematurely will stop your future financial planning and might disturb your long-term goals.

Not a Smooth Process – You may also note that the premature withdrawal process is not very simple and hassle-free. It might turn out to be a cumbersome process requiring many steps to go through and many formalities to fulfill.

Popular General Insurance Companies India, 2023

To Sum Up

SBI premature closure of FD penalty may cost you an amount because of the charge levied as well as the reduction in the interest rate that was fixed at the time of procuring the FD. Hence, it is important to check the terms and conditions of a bank’s premature withdrawal while planning to open an FD account.

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FAQs: SBI Bank FD Premature Withdrawal Penalty Calculator

What help does the SBI FD Premature Withdrawal Penalty Calculator offer in case of emergency planning of premature FD withdrawal?

When you already know the rate of interest you would have to forego in the FD as well as the penalty that you would have to pay, you would come to know about the amount that is due on premature withdrawal of an FD during an emergency.

Does it cost any money to use the SBI FD Premature Withdrawal Penalty Calculator?

No, you don’t have to pay any money for using the SBI FD Premature Withdrawal Penalty Calculator as it is free to use.

Is it time consuming to use the SBI FD Premature Withdrawal Penalty Calculator?

No, it is not at all time consuming. In fact, once you input the various details required in the tool, such as principal amount, date of deposit and original tenure etc., all you need is to tab the submit button to know the penalty amount offered by the premature FD calculator.

Is there any income tax implication of SBI FD Premature Withdrawal Penalty Calculator?

The income tax payable on the interest amount of an FD account differs depending on the investor. The tax saver FD premature withdrawal calculator does not consider the income tax implications at the time of calculating interest. Hence, the estimated amount shown by the premature withdrawal calculator is indicative in nature and is subject to tax deduction.

Can the amount shown by the SBI FD Premature Withdrawal Penalty Calculator vary?

Yes, the projected amount as shown by the calculator can vary if the date of premature withdrawal varies.

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May 10, 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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