what is the penalty for premature withdrawal of fixed deposit in sbi
When you open a Fixed Deposit (FD) in State Bank of India, you agree to keep your money locked for a fixed period like 1 year, 3 years, or 5 years. In return, the bank promises you a fixed interest rate. But life is unpredictable, you may need to break your FD before maturity (called premature withdrawal).
SBI does allow you to do this, but there’s a penalty on the applicable interest rate. Bank levies 0.50% up to 5 lakh and 1% above 5 lakhs. This means the bank will pay you 1% lower interest than what you would have earned for the period you actually kept the deposit.
Breaking an FD in SBI before maturity reduces your interest earnings by 1% compared to the applicable rate for the completed tenure. That’s why, unless it’s urgent, it’s better to hold your FD till maturity or take a loan against it instead of breaking it.