Fixed deposits (FDs) are popular investment options for people. FDs can be broadly categorised into two types – with premature withdrawal and without premature withdrawal.
FDs with premature withdrawal facility allow the depositor to close the term deposit even before the maturity period. However, a certain amount may be required to be paid by the depositor as a penalty to the bank. Banks such as State Bank of India (SBI), ICICI, HDFC Bank, Kotak Mahindra Bank have their own specific terms and conditions for those who are willing to withdraw their money from the fixed deposits before the completion of the maturity period.
SBI charges a penalty of 0.50% for premature withdrawal of an FD upto 5 lakh according to SBI’s website (Sbi.co.in). The bank charges 1% for premature withdrawal of an FD above 5 lakh but less than 1 crore.
SBI charges penalty on premature withdrawals
Retail term deposits up to ₹5 lakh- 0.50%
Retail term deposits above ₹5 lakh but below ₹1 crore-1%
The interest shall be 0.50% or 1% below the rate applicable at the time of deposits for the period deposit has remained with the bank or 0.50% or 1% below the contracted rate, whichever is lower. However, no interest will be paid on deposits which remain for a period of less than 7 days.
SBI offers FDs ranging from 7 days to 10 years. Recently the bank had cut FD rates across select maturities. The cut in FD rate follows a 25 basis points reduction in repo rate by the Reserve Bank of India (RBI) last week. for FDs maturing in 7 days to 45 days and 46 days to 179 days, SBI gives 4.5% and 5.5% interest respectively. Deposits with maturities 180 days to less than 1 year will fetch an interest rate of 5.8% with SBI.
FDs maturing in 1 year to less than 2 year, will give 6.4% interest. SBI offers 6.25% interest on long-term deposits, maturing in 2 years and 10 years. After the latest rate cut, SBI senior citizens will get 5% to 7% interest on deposits maturing in 7 days to 10 years.
SBI latest FD interest rates (below ₹2 crore) for general public (effective 10th October)
7 days to 45 days-4.50%
46 days to 179 days-5.50%
180 days to 210 days-5.80%
211 days to less than 1 year-5.8%
1 year to less than 2 year-6.4%
2 years to less than 3 years-6.25%
3 years to less than 5 years-6.25%
5 years and up to 10 years-6.25%