You book a fixed deposit for a specific term, and typically you close it when it matures at the end of that term. If you need to withdraw funds before maturity, you must submit an FD closing application. Understanding the steps and options helps you access your money when required. Read on for a clear, practical guide to closing fixed deposits on maturity and prematurely.
What is Fixed Deposit Maturity?
A fixed deposit (FD) is an investment where you lock a sum of money for a chosen tenure, which can range from a few days to several years. At maturity—the end of the chosen term—you receive your principal back. If you held a cumulative FD, the accrued interest is paid along with the principal at maturity. For non-cumulative FDs, interest is paid out at the intervals you selected (monthly, quarterly, annually, or at maturity).
How to Close an FD on Maturity
When your FD matures, you have a few options: withdraw the funds to your savings account, renew the FD for another term, or let the financial institution follow its default instruction if you do nothing. If no instruction is provided, some institutions either transfer the matured amount to your linked savings account or auto-renew the FD for the same tenure.
If you choose to withdraw the matured amount, the typical offline steps are:
- Visit the bank or NBFC branch where the FD is held
- Submit the original FD receipt or certificate
- Request closure of the FD at the counter
- Sign the required documents to confirm the closure
- Provide or confirm the bank account details where you want the funds credited
- Receive the matured amount in your savings account
To close an FD online, log into your net banking or mobile banking app and follow the instructions on the FD section or dashboard. Many institutions provide an option to close or withdraw matured FDs online, and funds are usually transferred automatically if you have not opted for auto-renewal.
What is Premature Fixed Deposit Withdrawal?
Premature withdrawal means closing your FD before its maturity date. This option lets you access funds early but usually comes with a cost: the interest payable on the FD is reduced and a penalty may apply. The revised interest rate and any charges depend on the issuer’s policy and the FD terms you accepted at booking.
For example, if you have invested a sizable amount for several years and face an urgent expense—like a medical emergency—you may decide to break the FD early to access the principal. While this provides liquidity, expect lower returns compared to staying invested until maturity.
How to Close Your FD Before Maturity
Early closure involves submitting a cancellation request and completing any formalities required by the issuer. Charges or reduced interest will typically apply. The offline and online processes are described below:
Offline premature closure process:
- Visit the bank or NBFC branch
- Request and obtain the FD cancellation form
- Fill out the form clearly with the FD account details
- Submit any requested documents or identity proof
- Hand in the completed form and documents to the branch
- After processing, the funds will be credited to your specified account
Online premature closure process:
- Log in to the issuer’s website or mobile app
- Navigate to the Fixed Deposit section
- Select the option for premature or premature closure of FD
- Enter the required FD details and submit the cancellation request
Online requests are usually processed faster than offline ones, so if you need funds quickly, use net banking or the mobile app. Keep your FD receipt or certificate handy to enter the correct FD number when closing.
FAQs on Fixed Deposit Closure
Can I close my fixed deposit automatically upon maturity?
Yes. You can arrange for the matured amount to be credited to your savings account at maturity by giving the issuer the necessary instructions. If you prefer, you can also choose to renew the FD for another term.
Is it possible to close a fixed deposit prematurely instead of waiting for maturity?
Yes. Premature closure is allowed, but the interest paid will typically be lower than the contracted rate and a penalty may be charged. Some institutions may also levy a separate closure fee depending on their policy.
Can I close my fixed deposit online or do I need to visit the bank?
Most banks and NBFCs allow both online and offline closure of FDs, for mature and premature cases. Online closure is usually faster and more convenient, while an in-branch visit may be required if additional verification or documentation is necessary.