You can't prematurely withdraw 5-year post office FD before 4-years
post office FD after 6 months but before 4 years.
According to an email clarification by India Post, a 5-year post office FD opened on or after November 10, 2023, cannot be prematurely closed until 4 years have passed from the date of opening of the FD. For FDs opened till November 9, 2023, the earlier rules are applicable for premature withdrawal. These rules are explained subsequently. But for now, let us understand the new rules.
New rules notified for premature withdrawal of post office FDs
The government revised the premature withdrawal rules for post office FDs of various tenures. The new rules are as follows:
a) No post office FD can be withdrawn before 6 months from the date of deposit and 5-year post office FD cannot be withdrawn before completion of 4 years.
b) If a 1-year, 2-year or 3-year post office FD is withdrawn after 6 months but before one year from the date of deposit, the deposit will earn only post-office savings account interest for the period (which is usually lower).
c) If a 2-year or a 3-year post office FD is prematurely withdrawn after one year, a penalty of 2% will be deducted from the applicable interest rate on a 1-year or a 2-year post office FD, as the case may be. The interest payable will be calculated as follows: Interest rate applicable to the number of years the FD has completed minus 2%. For example, if a 3-year FD is withdrawn after 1 year then the interest rate applicable to a 1-year FD will be reduced by 2% to arrive at the interest rate payable on the prematurely broken FD.
The circular states as follows: where a deposit in a two-year or three-year account is withdrawn prematurely after the expiry of one year from the date of deposit, interest on such deposit shall be payable
