Monday, February 19, 2018

What Happens if You Do Not Renew or Withdraw your FD?

When investing, it is imperative that you know how your finances will benefit or suffer under all possible scenarios. So, take a look at what happens if you don’t renew or withdraw your fixed deposit at maturity.

Fixed deposits (FDs) are popular investment options amongst Indians, and for good reason too. They are safe, independent of market fluctuations, and offer guaranteed returns. You stand to enjoy several benefits with no threat to your investment corpus. But, what happens to your fixed deposit once it reaches maturity, and you don’t renew or withdraw it? Read on to find out.

If you Don’t Renew your Fixed Deposit

  • While several financial institutions give you the option of selecting auto-renewal on maturity, not everyone chooses this. 
  • In case you fall into this category, here’s how this will affect your fixed deposit. If you didn’t opt for auto-renewal but opted for the sum to be transferred to a savings account at the time of application, that’s exactly what will happen. 
  • Once it is credited to the savings account, you can choose to either hold on to the money or reinvest it. You can create another fixed deposit, or choose another investment option altogether. 
  • It is possible that you haven’t specified the account to which you’d like the amount to be transferred and haven’t selected auto-renewal as well. In such a case, your financial institution will send you a notification. 
  • This is to inform you of the fact that your fixed deposit has matured and to ask you what you would like to do next. But, note that some banks skip this step and mail a demand draft of the amount to your registered address. 
  • According to the guidelines set by Reserve Bank of India, you will be tracked by the financial institution within 14 days after your FD matures and you choose to renew it. The interest will be calculated from the date of maturity instead of the date of renewal. 
  • If the financial institution delays in informing you and exceeds the 14-day window, they will be liable to pay for the delay. 

If you Don’t Withdraw your Fixed Deposit

  • If you don’t withdraw the FD at maturity, the financial institution may automatically renew your FD for as many time as required. 
  • But, if the FD isn’t withdrawn for more than two or three consecutive tenors, the institution will get in touch with the applicant. If the applicant is not responsive, the amount will be handed over to the applicant's nominee. 
  • Not claiming your FD at maturity may seem convenient, as the financial institution will auto-renew it. But, do bear in mind that the interest accrued will be at a savings account interest rate. 
  • If your deposit is unclaimed or overdue for a period of more than 10 years, the financial institution labels your fixed deposit as an inoperative account. Then, it transfers the sum to the bank’s Depositor Education and Awareness Fund Scheme. 

So, it is evident that ignoring your FD—or any other investment, for that matter—is far from advisable. To ensure that you make the most of your investments, it is wise to watch them closely. Some financial institutions even offer the facility to do this online. One such fixed-deposit service provider is Bajaj Finserv. Their FDs offer a high rate of interest, along with convenient online fund management.

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