Partial withdrawal of Recurring Deposit

Partial withdrawal of RD is not allowed by banks. While most banks do not allow partial withdrawal, other banks offer an alternative in the form of Loan or Overdraft facility which are made available by pledging the balance in RD account as collateral. Also, premature withdrawal is allowed at 1% penalty, for the period during which the deposit has remained with the Bank. Premature closure is allowed but with some penalty. While no bank allows you to make partial withdrawals, you can do so if you have a Recurring Deposit with a post office for at least a year. In fact, the withdrawn amount is considered a loan, which you can repay as a lump sum.

You can withdraw prematurely, but the interest paid will be lower than the base rate for the deposit tenure or that for the tenure the deposit has been with the bank. Some banks may subject the deposit to a penal interest (1-2 per cent). A Recurring Deposit account has a lock-in period of one month. Premature closure in less than a month will not earn interest. Only the principal amount will be returned.