Fixed Deposits (FDs) are one of the safest and most popular investment options in India. However, situations often arise when you need to withdraw your FD either on maturity or before the tenure ends. Understanding the FD withdrawal process, available methods, penalties, and tax implications helps you make the right decision without losing unnecessary interest.
This blog explains everything you need to know about FD withdrawal.
FD withdrawal refers to closing or partially closing your fixed deposit and receiving the deposited amount along with applicable interest. You can withdraw an FD:
On maturity
Before maturity (premature withdrawal)
Partially (in some banks)
The rules and charges depend on the bank, FD type, and tenure completed.
This is the simplest form of withdrawal.
The FD completes its full tenure
You receive the principal + full interest
Many banks auto-credit the maturity amount to your linked savings account
If auto-renewal is enabled, you must manually close the FD before maturity to avoid renewal.
Premature withdrawal means closing the FD before its maturity date.
Allowed by most banks
Usually attracts a penalty
Interest is recalculated at a lower rate
This option is used during emergencies or when better investment opportunities arise.
Some banks allow partial withdrawal instead of full closure.
Only a portion of the FD is withdrawn
Remaining amount continues to earn interest
Not available for all FD types
Most banks now offer a fully digital withdrawal process:
Log in to your bank’s net banking or mobile app
Go to Fixed Deposit / Term Deposit section
Select the FD you want to withdraw
Choose premature or full withdrawal
Confirm the request
Time taken: Amount is usually credited within a few minutes to 1 working day.
If you prefer visiting the branch:
Visit your bank branch
Submit a written FD closure request
Provide FD receipt (if issued physically)
Complete KYC verification
Amount is credited to your bank account
This method may take 1–3 working days.
There are multiple ways to withdraw a fixed deposit, depending on your bank and convenience. Most banks today offer both online and offline options.
With net banking, FD withdrawal is quick and paperless.
Log in to your bank’s net banking portal
Go to the Fixed Deposit or Term Deposit section
Select the FD you want to close
Choose full or premature withdrawal
Confirm the request
The withdrawal amount is usually credited to your linked savings account within a few hours or by the next working day.
Most banks provide FD withdrawal through their mobile apps.
Open your bank’s mobile app
Navigate to deposits or investments
Select the FD and place a withdrawal request
This is one of the fastest and most convenient methods, especially during emergencies.
If you are not comfortable with digital banking, you can withdraw your FD by visiting the bank branch.
Submit a written FD withdrawal request
Provide FD receipt (if issued)
Complete KYC verification
The amount is generally credited within 1–3 working days.
On FD maturity, banks usually auto-credit the maturity amount to your linked savings account.
No manual request required
Applicable if auto-renewal is disabled
If auto-renewal is enabled, you must close the FD manually before maturity to avoid renewal.
Withdrawing a fixed deposit before maturity can reduce your returns. Banks apply penalties and recalculate interest based on specific rules.
When an FD is closed before maturity:
Banks charge a penalty for early withdrawal
Penalty is deducted from the interest amount
Principal amount remains unaffected
The exact penalty varies by bank and FD type.
In case of premature withdrawal:
Interest is recalculated for the actual tenure completed
The revised interest rate is lower than the original rate
Penalty is applied on top of the reduced rate
This results in lower total returns compared to holding the FD till maturity.
Most Indian banks follow a similar penalty structure:
Public and private banks: 0.5%–1%
Senior citizen FDs: Slightly relaxed in some banks
No-penalty FDs: No deduction, but lower base interest
Always check your bank’s FD terms before withdrawing early.
TDS is deducted if annual FD interest exceeds ₹40,000
For senior citizens, the limit is ₹50,000
FD interest is fully taxable as per your income slab
Premature withdrawal does not avoid tax liability
You can submit:
Form 15G (non-senior citizens)
Form 15H (senior citizens)
to avoid TDS if your total income is below the taxable limit.
NOTE:- Fillable Form 15G/ 15H
Some FDs have a minimum lock-in period
Tax-saving FDs (5-year) do not allow premature withdrawal
Sweep-in FDs allow flexible withdrawals without full closure
Joint FDs may require consent of all holders (depends on mandate)
If you need money urgently, consider this comparison:
Interest loss due to penalty
FD account closes
Breaks long-term savings
Lower interest rate than personal loans
FD continues earning interest
No penalty or tax impact
Tip: Loan against FD is usually a better option for short-term needs.
Penalty and interest loss
Tax implications
Emergency vs planned expense
Availability of alternative funds
Impact on financial goals
Withdraw your FD only when necessary.
Sometimes, the withdrawn FD amount may not get credited immediately.
Technical issues in net banking
Bank holidays or non-working days
Additional verification for high-value FDs
If the delay exceeds the expected timeline, contact bank customer support.
For older or offline FDs, a physical FD receipt may be required.
Banks may ask for an indemnity bond
Identity and signature verification is mandatory
Processing time may increase
FD withdrawal can get delayed if:
KYC is incomplete or outdated
Name differs from bank records
PAN or Aadhaar details do not match
Updating KYC details usually resolves this issue quickly.
In joint FDs, withdrawal depends on the operation mode.
Jointly operated: Consent of all holders required
Either or Survivor: One holder can withdraw
Lack of required consent may block the withdrawal request.
If auto-renewal is enabled:
FD gets renewed automatically on maturity
Withdrawal requires premature closure of renewed FD
Penalty may apply after renewal
Always check auto-renewal settings before maturity.
Certain FDs have strict withdrawal rules.
Tax-saving FDs do not allow premature withdrawal
Corporate or special FDs may have lock-in periods
Always review FD terms and conditions before investing.
Online FD withdrawal may fail due to:
App or server downtime
Session timeout
Incorrect selection of FD or account
Retry after some time or use an alternate method like branch visit.
Ans: Yes, most banks allow premature FD withdrawal, except for tax-saving FDs. However, early withdrawal usually attracts a penalty and lower interest payout.
Online withdrawal: Instant to 1 working day
Offline (branch) withdrawal: 1–3 working days
The amount is credited directly to your linked bank account.
Ans: Yes, banks usually charge a penalty of 0.5% to 1% on the applicable interest rate if you withdraw the FD before maturity.
Ans: Partial FD withdrawal is allowed only in some banks and for specific FD types. If permitted, the remaining balance continues to earn interest.
Ans: Yes, most banks allow FD withdrawal through net banking or mobile banking apps, making the process quick and paperless.
Ans: Penalty-free withdrawal is possible only:
On FD maturity
In no-penalty FD schemes
For certain senior citizen or special FDs (bank-specific)
Ans: No, FD withdrawal does not affect your credit score because it is not a loan or credit product.
Ans: TDS is deducted on FD interest, not on the principal amount, if interest exceeds:
₹40,000 per year (regular citizens)
₹50,000 per year (senior citizens)
Ans: Yes, by submitting:
Form 15G (non-senior citizens)
Form 15H (senior citizens)
if your total income is below the taxable limit.
Ans: It depends on the operation mode:
Either or Survivor: One holder can withdraw
Jointly: Consent of all holders is required
Ans: If auto-renewal is enabled, the FD gets renewed automatically. Otherwise, the maturity amount is credited to your linked account or earns savings account interest.
Ans: No, 5-year tax-saving FDs do not allow premature withdrawal under any circumstances.
Ans: Yes, in most cases. A loan against FD avoids penalty, keeps your FD active, and usually costs less than losing FD interest.
FD withdrawal is a simple process, but withdrawing before maturity can lead to penalties and tax impact. Always compare premature withdrawal with alternatives like loan against FD before making a decision.
Understanding the process, charges, and rules helps you protect your savings and make informed financial choices. Withdraw your FD only when unavoidable—and always check your bank’s specific rules before proceeding.
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