Like other banks HDFC Bank has also decided to impose a penalty on the premature withdrawal of the money from the fixed deposit scheme. Earlier the bank did not used to impose any penalty for the purpose . Regarding the matter the issued a statement stating “As per the terms and conditions of fixed deposit accounts of the bank, the penalty on premature closure of FDs, including sweep-in and partial closures has been fixed by the bank at the rate of 1%. This will be applicable with effect from 24th January 2011.”
Most f the private sector banks impose a penalty on the premature withdrawal of money from the fixed deposit scheme on the other hand some banks like Axis Bank and IDBI Bank stand firm on their decision to not to impose any penalty on premature withdrawal.
Executive Director and CFO of Axis Bank Mr Somnath Sengupta said “We do not have any penalty for premature withdrawal . However, in case of premature withdrawal, the depositor will not get the interest for the original period but for the period the deposit has actually run,”
An official from HDFC Bank said that the customers that have invested in the Fixed Deposit scheme of the bank have a clear choice whether to continue with the investment with the bank or not as the amendment on the penalty will be applicable from 24th January a day before the RBI announces the monetary policy for the third quarter.
RBI has provided customers the liberty to withdraw money before the fixed tenure however it is up to the bank if it wants to implement the penalty in premature withdrawal. According to the guidelines from RBI if the bank intends to impose penalty then the bank must make sure that the customer is made aware about the fact.
2 comments:
Good informative blog.
Can you comment on long-term interest rates? With RBI expected to increase rates on Jan 25th by 25 bps with further increases in 2011, I'm wondering what is the expected rise in deposit rates by end of 2011.
I'm thinking of making a long-term (10 years) fixed deposit and wondering if there is benefit of timing this to later this year.
Statement is not correct.HDFC is imposing heavy penalty for premature withdrawal even before 24th Jan2011,as follows:
1)No withdrawal before within three months
2)No interest paid within six months
3)After six months but before one year - 3% lower than payable rate
4)after one year 2% lower
5)proportionate recovery of brokerage charges
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