What are the Charges for Withdrawing RD Before the Maturity Rate?

  • Recurring Deposit
  • 1 Months ago
Premature Withdrawal Charges
HIGHLIGHTS

  • Benefits of RD Investment
  • What is a Premature Withdrawal?
  • What is the process of requesting a Premature Withdrawal?


In just five years, a 1000 INR investment might yield a 4000 INR return. The investment comes in various forms such as real estate, stock market, mutual funds, debts. Knowledge is the basic requirement. Technical analysis, market research, and sensitivity analysis are some investment methods, but not everybody is aware of them. For example, investment in stocks requires a lot of research and technical skills. People who wish to invest but lack time and knowledge cannot use their wealth properly.

Shriram City Union Finance Ltd offers a unique solution to these problems. Recurring Deposit is a deposit wherein you can deposit regularly and earn interest. Shriram City Union Finance Ltd has earned MAA+/ with a "Stable Outlook" rating by ICRA (shows high credit quality). It is a healthy investment plan. Recurring Deposit can inculcate a regular habit of investing because it allows you to make a regular, timely deposit. The best part of a Recurring Deposit is it does not involve an enormous investment, and as little as an amount of 500 INR is enough to start.

Benefits of RD Investment

  • Help attain your future financial goals
  • Has no impact on highs and lows of the market
  • Offers a good return on your investment

Features of Recurring Deposits offered by Shriram City Union Finance Ltd

Shriram City Union Finance Ltd. offers attractive features like, firstly it offers a lucrative return on your investment, high-interest rate and stable return is the promise. Second, it offers flexible tenure; a scheme of a minimum of 12 months and a maximum of 60 months is on the table for you. Lastly, flexible payouts; at the time of registration, you can opt to either Auto Refund or Conversion to Fixed deposit.

Documents required for registration for Recurring Deposits

  1. Self-Attested ID proof
  2. Self-Attested Address proof
  3. Photographs
  4. Cancelled Cheque

What is a Premature Withdrawal?

If a person requires money immediately, they may request a premature withdrawal. Premature withdrawal means a request to withdraw from the deposit of the holder before its stipulated termination. Sometimes, under certain circumstances, a person may request a withdrawal before its stipulated period. Premature withdrawal would be a loss situation for the depositor as he will either have to bear premature charges or losses from premature withdrawal. In that case, every financial institution has its norms and regulations.

As per Shriram City Union Finance Ltd, breaking of Recurring Deposit calls for Premature Charges, which are:

Up to 3 months from deposit/renewal - No repayment

A person loses his deposit up to 3 months from deposit/renewal if he wishes to end his contract of recurring deposit before 3 months from the date of deposit or renewal. In this case, the holder or the depositor is left with nothing. In fact, there are losses on premature withdrawal of recurring deposits. In the event of the death of the depositor, the following documents must be furnished to withdraw the amount, An attested copy of the Death certificate, Will or testamentary disposition, if any, or an attested copy of Legal Heirship Certificate issued by a Tahsildar /corporation.

After 3 months but before 6 months - No interest is earned

If a person requests to withdraw from the recurring deposit after 3 months but before 6 months, the deposit is returned, but there is no profit as interest earned till the period is not considered in the calculation. In this case, the holder or the depositor loses the interest earned on the deposit. Again, the holder has to bear losses on premature withdrawal of recurring deposits as the interest earned is renounced.

After 6 months but before the date of maturity

Interest deduction charges at Shriram City of premature withdrawal charges of recurring deposit on premature withdrawal of recurring deposit. The interest is 2 percent lower than the interest rate applicable to a deposit period selected by the depositor, or if no rate has been specified for the period selected by the depositor, then 3 percent lower than the minimum rate at which deposits are accepted. These are the basic interest deductions on premature withdrawal of Recurring deposits.

For instance, if you have entered the contract of recurring deposit with Shriram City, the interest rate is 8 percent then in the first case, wherein deposit for the period for which the deposit has sustained, then you will earn the interest at 8-2=6, 2 percent lower than the interest rate specified if the rate of interest was not specified then 3 percent lower than the rate which Shriram City offers. The deductions in the interest rates are called premature charges or RD breaking charges.

What is the process of requesting a Premature Withdrawal?

The premature withdrawal of RD is allowed at the discretion of the company. The company has the full authority to approve the request for premature withdrawal. For the request of prematurity withdrawal, a request letter for prematurity withdrawal/an email should be submitted. The amount will be credited to the bank account registered with us.

After receiving the application of premature withdrawal, the company will analyze the request, the authenticity of the request, the necessity of breaking the RD and whether or not to approve a premature withdrawal. After that, however, the company will impose recurring deposit breaking charges, which the depositor shall bear. Basically, the interest deduction on premature withdrawal or no repayment of the deposit is the main Recurring Deposit breaking charges.

Conclusion

A recurring deposit is the best investment plan as it offers good returns and immunity from the highs and lows of the market. It is the perfect plan for those who lack knowledge of the markets. The recurring deposit also offers a gateway to premature withdrawal. In premature withdrawal, the depositor can request for withdrawal from his deposit. Premature withdrawal is withdrawal before the maturity of the contract of recurring deposit.

The depositor has to bear the premature charges and losses on premature withdrawal on the recurring deposits. Premature charges differ from one financial institution to the other. Premature charges are deductions of the interest rates specified for the recurring deposits. Thus, before entering the contract of recurring deposit, one should carefully read the premature withdrawal norms and be aware of the premature charges.
 

You can contact Shriram City Union Finance team to know more about RD premature charges.