Bank Fixed Deposit (FD) is one of the popular investment options in India. Conservative investors prefer to deposit money in fixed deposits. FDs have a duration ranging from 7 days to 10 years. Money is safe in FD and you also get interest on it. The FD offers to provide interest at a rate of 6.5–7.5% a year. You can continue FD till maturity or redeem it before completion of its term by paying a prepayment penalty. You can also take a loan against FD, which is much cheaper than a personal loan. With this, there are other benefits in FDs, but sometimes a situation arises that people have to stop FDs ahead of time. So through this article, we are going to give you information about online closure of SBI FD.
How to close FD?
You must surrender the deposit certificate after signing. You will have to fill in a form, stating that the FD has to be closed on the maturity date and then submit this signed form. After the due date, the maturity proceeds are transferred to the savings bank account. In case of online FDs, you can renew or close FDs online. At the same time, the question arises that what do banks do as FD matures? In case of mature FD with the bank, there are 2 methods –
- Himself: Auto Renew option – The bank automatically renews FD for one year.
- Auto Liquidation – Your FD becomes liquid and the bank transfers the maturity amount to your account.
Can you close FD before maturity?
Yes you can. But when doing so, the interest rate is revised and you have to pay a fine. When you close the FD, you get the same interest on the deposit, which is fixed for the maturity period and then a penalty is imposed. After closing, the money gets deposited in your savings bank account. If you need money for personal use, you can close the FD ahead of time. You can also reinvest FDs and take advantage of higher interest rate. When closing and reinvesting FD consider the prepayment penalty and be aware of it.
Close SBI FD online
You can close SBI FD online through the following steps –
- You have to first log in to your SBI Net Banking account by typing your user ID and password.
- Go to the Fixed Deposit option and click on e-TDR or e-STDR (FD) option and proceed. TDR, term deposit and STDR are special term deposits.
- After this, you have to click on ‘Close Account Permanently’ option.
- A list of all your bank FDs in SBI will be displayed on the screen.
- Click on the FD you want to close and then click the submit button.
- After this, explain the reason for closing the FD and click on confirm.
- A high-security password will appear on your registered mobile number.
- Type the password and click on confirm button.
- On the screen you will see a message saying that your e-TD or e-STD account has been closed.
- The FD amount will be deposited in your savings bank account.
How to Close FD offline?
- To close an FD offline, you need to go to the bank branch and then take the form to close the FD before maturity.
- After this, fill your name, FD number and bank account details in the form.
- Submit documents to the bank requesting the bank to close the FD.
- After this, the bank will start the process of closing your FD and as soon as the FD is closed, the money will be deposited in your savings bank account.
Why shouldn’t the FD stop?
If you close FD ahead of time, you may lose the compound interest earned. In addition, there may be a penalty on the interest you receive, which varies from bank to bank. Let us try to understand this through an example. Suppose you have deposited Rs 1 lakh in bank FD for 10 years. If the interest rate is 6.75%, then the maturity amount will be Rs 1,95,300. Now you redeem FD after 4 years. By doing this, you will incur a penalty of 1% on the prevailing interest rate. The net interest rate you will get after penalty is = 6.75% – 1% = 5.75%. From this you will get a maturity amount of Rs 1,25,655. In this case, you will incur a loss of Rs 70,000 on closing the FD before maturity, so withdraw the amount from the FD before maturity only if you need it a lot or you can cover this loss.