How to Break Your Fixed Deposit Before Maturity

The offline process depends on the provider. If an online request is unavailable or you need assistance, contact the bank or financial institution that holds the deposit to confirm its prescribed procedure.

You may be asked to:

1. Obtain and complete the premature withdrawal request form.
2. Provide your FD receipt or deposit details.
3. Submit identity and other supporting documents, if required.
4. Complete the verification process specified by the provider.
5. Confirm the bank account into which the eligible proceeds will be paid.

For a Bajaj Finance FD, check with customer support or a branch before visiting, so you can confirm the current procedure and documents required. Do not assume that the process for a bank FD applies to an NBFC deposit.

The published Bajaj Finance terms set out different conditions according to how long the deposit has been held. The following table summarises those terms; the applicable deposit agreement and current rules should be checked before making a request.

Important exceptions: The published terms include provisions for certain situations, such as the death of a depositor and specified emergencies. For eligible emergency expenses during the first three months, partial premature withdrawal may be allowed up to the lower of 50% of the principal or Rs. 5 lakh, subject to the company's verification and applicable policy. Specific conditions also apply to certain critical illness cases and small deposits.

These exceptions are not a blanket entitlement to withdraw every FD early. The eligibility criteria and documentation must be confirmed with Bajaj Finance.

For the full conditions, read the official Bajaj Finance premature withdrawal terms and conditions.

Premature withdrawal can reduce the interest you receive because the provider may calculate interest using the rate applicable to the period for which the FD was actually held, followed by any prescribed reduction.

For Bajaj Finance FDs, the published terms specify that after six months but before maturity, interest is calculated at a rate two percentage points below the rate specified for the period during which the deposit ran. If no rate is specified for that period, the terms provide for a rate three percentage points below the company's lowest offered rate.

The actual calculation depends on the applicable terms and the deposit's details.

Illustrative example

Suppose an FD was originally booked for a longer tenure, but you request closure after completing a shorter period. The provider may use the rate applicable to that completed period rather than the rate associated with the original tenure. The prescribed reduction may then apply.

This means the interest payable can be lower than the amount shown in the original maturity illustration. The example is conceptual; use the provider's actual calculation for your deposit before deciding.

Will TDS already deducted be refunded?

Tax deducted at source (TDS) is tax withheld and deposited with the government when applicable. The published Bajaj Finance premature withdrawal terms state that tax deducted at source and remitted to the tax authority before premature withdrawal will not be refunded by the company as part of that withdrawal.

TDS is not necessarily the final tax liability. The tax treatment of FD interest and any credit available for TDS depend on the individual's circumstances and applicable tax rules. Review the relevant tax records when filing your income tax return.

Before submitting a request, consider the following points.

• The withdrawal rules: Confirm whether premature closure is permitted for your particular FD and whether any exceptions apply.
• The amount you will receive: Review the provider's calculation, including the interest payable and any applicable deductions.
• Your original and completed tenures: The interest rate used for premature closure may differ from the rate offered for the original tenure.
• Tax implications: Check the interest already credited, any TDS deducted and the tax treatment applicable to you.
• The payment account: Confirm the bank account details recorded with the provider and follow any required verification process.
• The processing time: A submitted request may require additional verification before the payout is processed.
• The alternatives: If you need only part of the money, check whether partial withdrawal is allowed or whether another funding option is more suitable.

Reviewing these details can help you understand the likely financial impact before closing the deposit.

If you need money before maturity, premature withdrawal is not the only option in every situation. The alternatives available depend on the provider, the deposit terms and your financial circumstances.

Partial withdrawal

Some deposit products or providers may allow part of a deposit to be withdrawn while the balance remains invested. This facility is not universal. Confirm whether it applies to your FD and how the remaining deposit will earn interest.

Loan against an FD

Some banks and financial institutions offer a loan or overdraft against an eligible FD. This may allow you to access funds without closing the deposit, but interest, fees, borrowing limits and repayment obligations may apply.

Check whether your deposit qualifies and compare the borrowing cost with the interest you could lose through premature withdrawal. Do not assume that every FD provider offers this facility.

Using other available savings

If the amount needed is small and you have accessible savings, compare using those funds with closing an FD early. Consider your emergency reserve and upcoming expenses before making a decision.

No alternative is automatically preferable. The choice depends on how much money you need, how quickly you need it, the cost of borrowing and the effect on your savings.

Breaking an FD before maturity can provide access to funds, but it may reduce the interest you receive or, in some circumstances, mean that no interest is payable. The rules depend on the provider, the type of deposit and the period for which it has been held. For a Bajaj Finance FD, review the applicable premature withdrawal terms and the payout calculation before submitting a request. If you need only part of the money, check whether partial withdrawal or a loan against an eligible FD is available. Comparing these options can help you understand the financial implications before deciding.