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Breaking your Fixed Deposits before Maturity – Whats the Procedure ?

by Manish Chauhan · 61 comments

Today let me share the procedure and some points regarding premature breaking of your fixed deposits. We have seen, that due to the ease of creating fixed deposits online, more and more investors create them if they are not able to find the right purpose of their surplus money and then in case of emergencies, they have to break their fixed deposits prematurely.

Procedure for Breaking Fixed Deposit Before Maturity

Now the procedure for breaking the fixed deposit is fairly simple and much faster than many believe. However the whole procedure can vary across PSU banks and Private banks. The procedure can also vary if you take into consideration online vs. offline

When you create a Fixed Deposit or Recurring Deposit, the bank sends you Deposit Certificate or receipt after some days of opening it (Incase of many PSU banks, you need to collect it manually by going to branch) . This is just a receipt or a proof of deposit. Now you can carry this deposit certificate to branch and ask the bank official to break your FD, they should be able to process your request.

However incase you do not have the deposit receipt or have lost it somewhere, you don’t have to worry much, in that case you will have to give them a letter or fill up a premature FD breaking form available at bank branch, read further to know about it. Read about Requirement of Fixed Deposit on Opening Lockers here

Breaking Fixed/Recurring Deposits Online

A lot of banks allow you to open create fixed deposits online from your net banking account. It’s fairly simple and fast, but when it comes to breaking fd before maturity, a lot of banks allow it online, but many do not. I have seen that most of the private banks allow you to break your fixed deposits online itself, all you need to do is go to “service request” section of your net banking and you will see a section where you can break the fixed deposit before maturity. In ICICI, when you go to “service requests” section, on the right hand side you can see “Fixed/Recurring Deposits related” , you can go to that section and choose “Premature Closure of Deposits” and then choose the FD/RD number and cancel it. Your request will be processed in next working day and you will get the money in your account. Check the screenshot below which shows you that.

Breaking Fixed Deposit before maturity Online

Breaking Fixed/Recurring Deposits Offline at Branch Level

A lot of PSU banks do not allow breaking your Fixed deposits or Recurring Deposits online. You will have to visit the branch itself and manually break it. Here is what you need to do

  • Step 1 - Write an Application on plain paper mentioning you want to break your FD/RD, mention the account number where it should get credited, mention the Deposit Number. At times, you have to fill the premature FD Breaking form available at bank itself. In almost all the cases, the fixed deposit is broken instantly, the bank official must be able to do it with a click of the button.
  • Step 2 – Attach an ID proof (PAN etc). Private Banks have the Xerox machines inside the bank itself, so you just need to carry the original id proof and they will help you with the photo copy.

Below is a sample letter stating wish to break the fixed deposit or recurring deposit prematurely.
Breaking Fixed Deposit or Recurring Deposit Letter

Important – Incase of companies with current account, company seal will be required along with signatures of partners.

Penalty on Breaking Fixed Deposits before Maturity

When you break fixed deposits prematurely before maturity, you will not get the same interest rate offered originally. You will get the interest rate which is applicable for the tenure you actually ran the FD for. For example, suppose you opened the FD for 1 yr originally, and the interest rate offered was 9% .

Now if you closed the FD in lets day 3 months, and if the interest rate for 3 months FD was 7%, then you will get only 7% interest for the period of your fixed deposit. Also in several cases, there might be penalty charges which is nothing but another reduction in your interest rates. Like bank rules can say that if your FD was opened for 1 yr, and if you break it before maturity, you will get 1% less interest than offered. many a times, there is no penalty for short term fixed deposits.

Some Important points to know

  • There are various kind of fixed deposits products, at times there are fixed deposits which also allow you to withdraw the FD money instantly through Debit Card itself, like for example Kotak bank flexi-Deposit.
  • Also, if your fixed deposit is under Sweep In Account, then you should be able to withdraw the money instantly without manually breaking it, read more about sweep in accounts here.
  • For some banks fixed deposits (private banks mostly), the some FD’s get broken if you issue a NEFT/RTGS transfer to some bank account. Like if you have a 2 lac FD in Kotak Bank (flexi deposit) and if you transfer Rs 2 lacs in another account through NEFT/RTGS/IMPS , then the transfer happens and the FD is broken.

In worst cases, your Fixed deposit breakage might require some approval from main branch, but it should not take more than 2-3 days in worst to worst cases.

Some Tips

  • If you already have few commitments in near future, avoid creating long term Fixed deposits, create short term FD’s
  • Instead of creating one large FD (example 5 lacs FD), better create 2-3 FD of small amounts like 2 lacs + 2 lacs + 1 lacs. This way if you need partial amount (lets say 3 lacs or 2 lacs or 1 lac), you will be able to break the FD’s partially. It won’t affect the full amount
  • You can take a loan against Fixed Deposit or overdraft against your FD.

Share your personal experience about breaking the Fixed Deposit in comments section if any!. Did the article help you !

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{ 61 comments… read them below or add one }

1 Joel Trinidade August 12, 2013 at 11:44 am

Dear Manish,

This was a pretty simple topic to be put on your blog . I was surprised . After all the complexities this seemed to be too basic . Anyways Kudos !!

Best regards
Joel Trinidade


2 Manish Chauhan August 12, 2013 at 12:32 pm

Hi Joel

You might be aware about the process, but trust me many are not :) . What seems to be simple is very advanced level knowledge for a big number of investors :) . We have all kind of investors here :)



3 Ritwick August 20, 2013 at 10:55 am

Right Manish.. Thanks!!


4 rajinder December 14, 2013 at 5:15 pm

Agreed with Manish.I too had a little knowledge bout FD’s before reading this and now i understoond a lot.


5 NAGAMOHAN August 12, 2013 at 12:39 pm

Dear Manish,
I have a doubt
“For example, suppose you opened the FD for 1 yr originally, and the interest rate offered was 9% .Now if you closed the FD in lets day 3 months, and if the interest rate for 3 months FD was 7%, then you will get only 7% interest for the period of your fixed deposit. Also in several cases, there might be penalty charges which is nothing but another reduction in your interest rates. Like bank rules can say that if your FD was opened for 1 yr, and if you break it before maturity, you will get 1% less interest than offered. many a times, there is no penalty for short term fixed deposits.”

The penalty charges which is nothing but another reduction in your interest rates.For what ineterst rate the penalty of 1%(for example) will be done, either on 9% or 7% as illustrated above.

Thanks for a good article as always


6 Manish Chauhan August 12, 2013 at 2:03 pm

It will be DOWN from applicable interest rate that is 7% , so 7% – 1% = 6% will be your final interest rate !


7 Puja August 12, 2013 at 2:21 pm

Hi Manish,
Thanks for this article. I have a lot of small small FD’s in almost all my acoounts and I am planning to buy a house for which I wanted to break these in sometime. This article of yours came in the right time. :)


8 Manish Chauhan August 12, 2013 at 2:27 pm

Good to hear that :)


9 ksundar August 12, 2013 at 3:22 pm

Hi,nice article,
One thing can be added: In PSU & even in some pvt banks,we need to update the FD personally even if it is given as ‘auto-renewal’ of principal+interest or principal alone.

I think if the option is ‘auto-renewal’,then the old FD interest rate should be applied.Most of the time interest may come down from 9.25 to 9.0 or 8.75% as per the existing rates.

If the interest rate for FD goes above as per the existing situation,we need to go to bank personally and close the previous FD(earning less interest) and re-starting the FD as per the latest higher interest rate!


10 Saravanan A August 13, 2013 at 10:20 pm

What if the interest rates have come down? In that case will they renew at higher interest rate? I think its renewed at the prevailing rate at that time.


11 Manish Chauhan August 21, 2013 at 3:19 pm

Thanks for that info . Was not aware about it !


12 Ashish August 12, 2013 at 4:16 pm

I created a simple excel which decides whether it’s worth breaking an FD prematurely or not to take advantage or rising interest rate. https://www.dropbox.com/sh/vq8ne6qbu10if7b/Upp-TVnnuT/FD%20Renew%20or%20Not.xls

Please publish if you see fit.


13 Manish Chauhan August 21, 2013 at 3:12 pm

Thanks for sharing that. I am sure most of the readers will find it worth


14 dinesh jain August 12, 2013 at 6:58 pm

I would like to make special mentioned of IDBI Bank:

1. their FD rates are very attractive.
2. They don’t charge any penalty if you prematurely take out your money from FD which i think is a very good option


15 Manish Chauhan August 21, 2013 at 3:07 pm

Thanks for adding that Dinesh !


16 ROHIT BAID September 20, 2013 at 5:08 pm



17 mono August 13, 2014 at 5:58 pm

Add to it
the IDBI staff are very good
unlike the SBI ones..
and yes..its correct
that Public sector banks don’t have option
of breaking FD online


18 ARBIND KUMAR SHARMA August 12, 2013 at 7:11 pm

dear manish
the article is very fine & useful for us. What is the rate of tax cut on sweep in account.


19 Manish Chauhan August 21, 2013 at 3:07 pm



20 mono August 13, 2014 at 6:04 pm

if you have a FD with a sweep out facility..
then interest is given only on the portion which remains in deposit
for example
a FD for 1 year of 25000 with 1500o sweep out facility

if you don’t sweep out anytime
you get interest as if it was a normal FD …
and similarly tds is cut ..
if you sweep out in the 1st month 10000( 15000 is limit)
then you FD at the end of tenure..is like
25000 for 1 month but 15000 for 11 months( interest rate is given the same)
and as such tds is calculated


21 Manish Chauhan September 20, 2014 at 5:45 pm

Thanks for sharing that !


22 Thomas August 12, 2013 at 7:21 pm


I am an NRI and have an account with south Indian bank. They are providing a interest rate of 9.25 for 2 years FD. I was thinking of getting interest on a monthly basis and start a RD with the interest amount. Is it worth it?

Please suggest.



23 Thomas August 13, 2013 at 8:56 am

RD interest rate is also 9.25


24 Manish Chauhan August 21, 2013 at 3:07 pm

It will depend on your requirement . Why do you want a monthly interest ? Better let it accumulate it in the FD itself !


25 Krish August 13, 2013 at 1:14 pm

With HDFC bank, any one can break FD online and it instantly deposits the amount in your account. I really like the HDFC bank features with regard to Fixed Deposits online. Customer can book, nominate and break the FDs through internet banking instantly.

Here is one query on breaking the FD. 3 months ago I booked a FD for 1 year. The interest rate for 1 yr was 8.75% and 3 months was 7.25%. Just a week ago they revised 3 months FD rate as 8.75%. If I break the FD now (3 months passed), am not sure whether bank would give current FD rate of 3 months or FD rate of 3 months pervailing at the time of booking.


26 Manish Chauhan August 21, 2013 at 2:42 pm

Yes, they will give the return for lower tenure only !


27 Saravanan A August 13, 2013 at 2:44 pm

Many of the banks allow now to create and break FD online instantly. Its much simpler than the ICICI demo shown. Just click on Close account and select the account to be closed and confirm. As simple as that. This instant closure is available in Citi Bank, State Bank of India and Indian Bank. There is a big advantage in Indian Bank, there is no pre-closure charges from April 2013 and their interest rates also comparatively good.


28 Manish Chauhan August 21, 2013 at 2:42 pm

Thanks for sharing that . I was not aware about it !


29 parimal August 22, 2014 at 12:43 am

Is it available in SBI too?
I dont think so.I searched a lot but did not get that option.
Can u tell me wer that option is if at all its there?
thank in advance


30 manyam August 13, 2013 at 8:04 pm

Hi Manish,

Nice article again about a brief information on FD. But seems like a lot of more detailed information required on new kind of FD linked facilities like Sweep-in Accounts and Super Saver Accounts etc. It would be good if provided one example case using all those facilities to understand premature, partial withdrawal along with penalties, reduced ROI calculations and TDS on final interest amount etc. Also some explanation about Form 15G/H as well.

Thanks. & Regards,

Best Regards,


31 Manish Chauhan August 21, 2013 at 2:33 pm

I have written down on Sweep in accounts – http://www.jagoinvestor.com/2011/03/auto-sweep-bank-account.html


32 Chetan August 14, 2013 at 12:18 am

Tnx for the article !!


33 Manish Chauhan August 21, 2013 at 2:28 pm

Welcome !


34 kumar August 14, 2013 at 3:05 pm

hi Manish,

Thanks for the article, ICICI bank does not offer good interest rates if the deposit is broken prematurely,Say for example if you break your 390 days deposit which offers 9% prematurely in a year you will only get 7.5 – 1% which is 6.5% which is really a waste, if you break the deposti within a month you will get only 4.75- 1%=3.75% which is lesser than savings bank interest rate! they have 1% penalty for all preclosure deposits. so think before you break.

ICICI bank interest rates below for your reference.
7 days to 14 days 4.50
15 days to 29 days 4.75
30 days to 45 days 5.50
46 days to 60 days 6.25
61 days to 289 days 7.00
290 days to less than 1 year 7.25
1 year to 389 days 7.50
390 days to less than 2 years 9.00



35 Manish Chauhan August 21, 2013 at 2:23 pm

Thanks for that info kumar .


36 astrosunil September 27, 2013 at 6:19 pm

In ICICI net banking statement for FD/RD’s there is a column “Current Balance”. I think this amount will be credited to your account after subtracting the penalty Right ?


37 Simran August 28, 2013 at 10:57 pm

Thanks for the info and the demo! Is it legal that you copy a demo of secure banking and put it on ur site?

Anyways.. one thing I will share… (THIS CAN BE WITH ANY BANK)

When you close an F.D. Premature at branch esp:
1. The Customer care officer will ask too many questions on WHY ur closing.. why dont u take loan or this or that or remove half money etc. They get some rewards on Retaining a customer… (Got to know this from sumbuddy who works for a bank)

So its better to book online and close it only… No Jhanjhat mari of dealing with irritating guys. (Mostly they have men asking questions and its very irritating if the guy is – eying at you badly)


38 Manish Chauhan August 29, 2013 at 10:47 am

Yes. Thanks for sharing those points .


39 Vijay August 30, 2013 at 2:38 pm


Is there a way to change the way in which we receive the interest? I had made an FD and opted to receive the interest at the end. After some re-evaluation, I think I could divert the interest (~3-4k) to some SIP every month. I know I can break the FD and redo everything with the appropriate choice for interest repayment.



40 Manish Chauhan September 3, 2013 at 2:16 pm

Yes, you can do that, But I dont think you can CHANGE It, now you will have to close it and reopen that !


41 ahmed September 23, 2013 at 5:10 pm

Hi Manish,

I have a FD in SBI bank and the FD maturity date is near. The problem is I am not in India, I want my father should collect my FD. Can u please explain me what is the


42 Manish Chauhan September 25, 2013 at 12:34 pm

But the FD amount will come into your account itself , correct ?


43 abhijit kulkarni September 25, 2013 at 3:48 pm

Hi Manish,
Suppose if I make a FD of 3lacs rupees,from 1April-2013 to 28Feb2014..Then also bank will deduct the TDS..becoz on month of march only we get call or mail from bank to submit the form15g…but in month of march if we dont have any FD account, then how they will dedcut the TDS..


44 Manish Chauhan September 30, 2013 at 9:44 am

Create a FD and then go to branch to give the Form , why wait for later


45 RAJANNA K V December 14, 2013 at 8:01 am

Dear Manish,

I want to share my experience regarding FD breaking online or premature withdrawl.
I am an NRI & have my A/C in HDFC. I have opened FDs online for 1/2/3/5 years tenure. Some of my FDs were booked for 8.75% ROI for a term of 3years & recently ROI was increased to 9%. So I thought of breaking the existing FDs & to create new FD for revised ROI. Initially I wrote to HDFC relationship manager about this matter & he also suggests that I can do so. In my case an FD booked for 3 years had completed 1 year & I wanted to break this FD online. As per HDFC if we break the FD after 1 year then there is no penalty for premature withdrawl(As my FD originally booked for 3 years term). So I started to operate this through netbanking & to my surprise when I complete all the directions & finally a screenshot appeared saying to confirm. Surprisingly in the last line of the screenshot it is showing ” interest to be recovered”(amount equal to what was paid for 1 year) & it also shows amount to be credited to my A/C is only principal amount. So if I click the confirm button definitely I will loose the entire interest which already paid for 1 year. So I stopped the operation & wrote to the HDFC relationship manager about the issue & sent him the screenshot also. He explained many things but, he is not assuring that, if I continue the operation will he give guarantee that total interest paid will not be recovered from my A/C. Later I wrote to NRI HDFC services but, since today none of them had clarified the issue, then I wrote to HDFC grievance redressal 3 days back & I also wrote to my Branch manager also. But, till date none of the Bank officials are ready to resolve this issue & simply prolonging the matter & everytime they say, they will revert back in 4/2/1 days. This is going on with me since 26.11.2013 & I am yet get the clarification for this. So I request my friends who have their FDs in HDFC & while breaking the FDs be carefull before confirm the screen button.




46 Manish Chauhan December 14, 2013 at 10:06 am

If I see HDFC website for NRI fixed deposits http://www.hdfcbank.com/nri_banking/accounts/fixed_deposits/nre_fixed_deposits/nre_fixed_deposits.htm

here is what I can see

In case of premature withdrawals:

Before completion of 1 year: No interest will be payable
After completion of 1 year: The rate applicable will be lower of –

The base rate of the original/contracted tenure at which the fixed deposit is booked OR
The base rate applicable for the tenure for which the Fixed Deposit has been in force with the bank

So I believe on your page, its just a remark that if your FD is broken before 1 yr, then you will not get any interest . If your FD is more than 1 yr old , then you dont need to worry . I think you can go ahead


47 Rajanna December 14, 2013 at 11:46 am

Dear Manish,

Yes you are right, if I break FD before 1 year I will not get interest, but I am breaking the FD after 1 year. Moreover when I booked FD I chose the option of quarterly interest payout & I already recieved interest quarterly. Now it is clearly showing on the screenshot that, the total interest what I got for 1 year to be recovered. So for this none of HDFC officials are giving the clarification as why it is showing like this. Further none of HDFC officials are clarifying what will be the principal amount credit to my a/c, ie, whether the same original principal amount OR principal amount minus total interest paid for 1 year. So all HDFC officials starting from Branch manager, relationship manager, NRI service cell are simply asking for the time to resolve the issue. Finally 2 days back I sent a mail to HDFC grievance redressal & again the same thing from them also, because I got a mail just now from them asking for 5 working days to resolve the issue.


48 Manish Chauhan December 18, 2013 at 5:16 pm

Now in this case, when they are just not helping much, you have no option but to threaten them to complain to banking ombudsman and RBI . See if this wroks !


49 Rajanna December 18, 2013 at 7:06 pm

Dear Manish,

Yes, today I got through it. Finally one of HDFC NRI relationship manager took the risk & assured me if any unwanted deductions after breaking the FD then he will see that the same will be reversed. Based on his assurance in writting I could operate the Liquidate procedure of FD & it is successful & there is no any extra deduction. As per the relationship manager it is the problem with programming & that is the reason why screenshot is showing ” Interest to be Recovered as full interest earned”. However I should thank that relationship manager who helped me in this regard. All other HDFC people starts from my Branch head, branch operations manager, NRI services cell, Grievance redressal people didnot give any final conclusion despite several reminders & all the time they apologise for the delay & request for some more days. This is how we have to struggle with the present institutions of India.

Thank you.




50 Manish Chauhan December 25, 2013 at 12:25 pm

Great !


51 Deva December 19, 2013 at 7:38 pm

Hi Manish,

I invested in an FD in SBI Bank for 5 years. The Bank Manager insisted that I create the FD online but I was reluctant as I saw some statement in the website “Pre-mature closure of e-TDR/e-STDR under tax saving scheme is not allowed during the lock-in period. ” So I was wondering if I did it through them, then I would have an option to break my FD if needed. On asking the Bank Manager concerning this, she said FD’s created either online or otherwise for tax saving purpose cannot be broken at all. I was little taken back cos I was thinking all the while that I could break those 5 year FD’s in case of emergency. Is what the Bank Manager said true?


52 Manish Chauhan December 25, 2013 at 10:36 am

Hi Deva

I suggest this needs more discussion, hence please open a thread on our forum – http://www.jagoinvestor.com/forum


53 Vivek March 1, 2014 at 8:24 pm

Hi Manish,
By mistake I have opened an RD online in HDFC Bank but actually I was to open the same few days later(due to my salary cycle).I tried to liquidate it but its saying contact bank.
Please suggest any other option instead of going bank or I need to keep the RD open for sometime to liquidate it.


54 Manish Chauhan March 2, 2014 at 6:10 pm

No Vivek

You dont have any other option. Once you have done it online, its done, Now you cant change it saying that it happened by mistake . So you need to go to branch and then close this RD and then later restart it .


55 Rituraj P July 3, 2014 at 5:24 pm

Hi Manish,

I recently opened an FD in Sbi bank. Now I want
To break the fd but I won’t be able physically present
At the time of breaking of the FD. Hence my father
Will be doing that on my behalf. Upon enquiring the
Same at SBI they first said just sign and put your savings
Account number at back of deposit certificate. Now upon asking again they say write an application in name of branch manager , sign the back of deposit certificate and mention the savings account number. So that has left me confused. Can you
Please help me with the procedure ?



56 Manish Chauhan July 3, 2014 at 9:34 pm

I think an authorization letter is mandatory , how can someone go and claim that they know you and break your FD ? I think you should go as per their suggestion



57 Rohini July 14, 2014 at 4:48 pm

So the 1% penalty that they levy is a reduction in the interest rate? But we will get back the original amount that we invested? Say we invested Rs. x for 1 year. Maturity amount was Rs. x + y (y being the interest amount). Does premature withdrawal mean we will get back Rs. x at any cost? (it may only result in Rs. y being lessened?)


58 parimal August 22, 2014 at 12:51 am

Yes Rohini u r correct.When you deposit money in any bank under savings or fixed deposit the principal amount is never touched.Only the interest may vary depending upon which type of account u have opted for (fixed,savings,recurring etc),or if it was a premature closure of the account.So the bank can deduct only the interest & not the amount which you originally invested.


59 Manish Chauhan September 21, 2014 at 9:30 pm

Yes, you will surely get invested amount X + new Y , where new Y is less than original Y


60 Mahesh Singh August 28, 2014 at 12:03 am

Dear Manish,

My mother has an FD in Central Bank of India. Unfortunately she has lost the original receipt of the FD.
She wants to premature close the FD. The bank is informing her that she has to apply for Duplicate FD through an indemnity Bond. They are also informing her that Premature closure is not allowed for a duplicate FD and it is allowed only for Original FD. Is this TRUE?

Please advise what options she has?

Thanks in advance.


61 Manish Chauhan September 20, 2014 at 4:22 pm

I think they are just misleading her . The receipt is only a receipt document and nothing else. A bank cant deny her from breaking the FD if the reciept is missing . She can fill up a form and break the FD along with her ID proof



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