FD Premature Withdrawal Rules & Penalty
Breaking an FD early — bank-wise penalty, how the revised interest is calculated, partial withdrawal and when a loan against FD is cheaper.
Updated 27 September 2026 · 25 banks trackedWhat you need to know
Most regular FDs can be closed before maturity. The bank then pays the rate applicable for the period the money actually stayed with the bank (not the contracted rate), minus a penalty — typically 0.50% to 1%. Deposits closed within 7 days usually earn no interest. Tax-saver FDs cannot be broken.
Bank-wise premature withdrawal penalty
| Bank | Premature withdrawal penalty |
|---|---|
| State Bank of India | 0.50% (below ₹5 lakh) / 1% (₹5 lakh and above) |
| HDFC Bank | 1% |
| ICICI Bank | 0.50% – 1% |
| Axis Bank | 1% |
| Punjab National Bank | 0.50% – 1% (by tenure and amount) |
| Bank of Baroda | Up to 1% |
| IDFC FIRST Bank | 1% (nil for senior citizens below ₹3 crore) |
| Kotak Mahindra Bank | Nil (up to 180 days) / 0.50% (181 – 364 days) / 1% (365 days+) |
| RBL Bank | 1% |
| YES Bank | 0.75% (up to 181 days) / 1% (beyond 181 days) |
| Union Bank of India | 1% (no interest if closed within 7 days) |
| Bandhan Bank | 1% |
| IndusInd Bank | 1% |
| Central Bank of India | As per bank policy; differs for callable vs non-callable deposits |
| IDBI Bank | Reduced interest on premature withdrawal (penalty % not stated) |
| Karnataka Bank | Callable deposits: 0.50% (<₹2 cr), 1.00% (₹2–25 cr) |
| Bank of Maharashtra | As per bank policy — check before booking |
| South Indian Bank | 1% for all tenors and amounts (deposits opened/renewed from 26 Mar 2026) |
| Tamilnad Mercantile Bank | Lower interest and penalty as per bank rules (% not stated) |
| Canara Bank | As per bank policy — check before booking |
| Standard Chartered Bank | 1% on the interest rate applicable for the period held |
| Bank of India | 0.50% – 1.00% |
| Indian Bank | Allowed with penalty (% not stated); not for tax-saver |
| Indian Overseas Bank | Charges apply as per scheme (% not stated) |
| Federal Bank | 1% on applicable rate (callable FDs) |
How the revised interest is worked out
- Find the applicable rateRate on the bank’s card (on the booking date) for the tenure the deposit actually ran.
- Compare with contracted rateTake the lower of the two.
- Deduct penaltySubtract the penalty (e.g. 1%).
- RecalculateInterest is recomputed at this rate; any excess interest already paid is recovered from the principal.
Break the FD or take a loan?
If you need money for a short time, an overdraft against the FD (FD rate + 1% to 2%) is often cheaper than breaking it, because you keep earning the full FD rate and pay interest only on the amount and days used.
Calculator
Frequently asked questions
Can I withdraw only part of an FD?
Some banks allow partial withdrawal; the withdrawn part is treated as a premature closure. Others require full closure.
Is there a penalty for senior citizens?
Some banks waive it for seniors; check the bank’s terms.
Is TDS affected?
Interest paid is reduced; TDS is adjusted accordingly.
Information is for education and comparison. Rates and rules change — confirm with your bank and a tax adviser before investing. FinancePortal is not a financial or tax adviser.