Fixed deposits (FDs) are among the most popular investments today. This is due to their attractive interest rates and flexible tenures. However, it is essential to note that when you invest in a fixed deposit, you agree to the financial institution's terms and conditions. But, have you ever wondered what would happen if you do not renew or withdraw your money?

Let’s take a look what will happen in a scenario where a fixed deposit is neither renewed nor withdrawn.

What Happens If You Do Not Renew or Withdraw at Maturity?

If you have a fixed deposit that has matured and you do not renew it or withdraw the money, there are a few things that could happen.

The financial institution will automatically credit the funds to your linked bank account on maturity of your fixed deposit. However, if you have provided instructions at the time of booking the FD to auto-renew, then the financial institution will renew your FD with the same tenure but at the prevailing interest rate.

If you choose to withdraw your Fixed Deposit before maturity, a premature withdrawal penalty applies. It is advisable to review applicable terms before initiating early withdrawal.

It is always best to check with your financial institution before making any decisions about withdrawing a fixed deposit so that you know what charges will apply.

How to Renew or Withdraw Your Fixed Deposit

Your renewal or withdrawal preference is chosen at the time of booking your FD. Based on your selection, the maturity amount is either automatically renewed or paid out to you.
Early exit is available at any point before maturity with a penalty.

Benefits of Renewing Your Fixed Deposit

You reinvest your money for a period when you renew your fixed deposit. It has the following benefits:

• Continued compounding of returns (for cumulative deposits).
• Your money is locked away for the term, encouraging long-term investing.
• Possible eligibility for renewal benefits, subject to institutional policy.

Process of Renewing a Fixed Deposit

When you open a fixed deposit account, you will be asked to choose the tenure of your deposit. The typical tenures are 12 to 60 months. At the end of the chosen tenure, your deposit will mature for cumulative FDs. If you have chosen renewal at the time of booking, the FD will be auto-renewed for the same tenure at prevailing interest rates. However, if you have chosen to withdraw at the time of maturity, your funds will be credited to your linked bank account. It is essential to check with your financial institution about their policy on auto-renewals before opening a fixed deposit.

What is the Process of Withdrawing Your Fixed Deposit?

If you have chosen to withdraw your fixed deposit at maturity, the funds will be credited to your linked bank account. However, if you have chosen auto-renewal, and you want to withdraw the FD, you can reach out to the financial institution at least 7 days before the maturity date to renew the FD.

Auto-Renewal and Auto Withdrawal of Fixed Deposits

At the time of booking your Fixed Deposit, you can select your maturity preference — either auto-renewal or auto-withdrawal.

Auto-Renewal: Your FD is automatically renewed for the same tenure at the interest rate* applicable at the time of renewal.
Auto-Withdrawal: Your principal, along with accrued interest, is automatically paid out to your registered bank account upon maturity.

This ensures your investment continues working for you without any manual intervention. For details, refer to T&C.*

Conclusion

Planning your Fixed Deposit is key to making the most of your investment. Whether you choose auto-renewal to keep your money growing or auto-withdrawal for timely access to funds, selecting your preference at the time of booking ensures a seamless experience. For early exit, nominal penalty charges apply. Always review the applicable terms before making any maturity-related decisions. Invest wisely and let your Fixed Deposit work for you. *T&C apply.

Key Takeaways

• It is essential to note that when you make a fixed deposit, you agree to the terms and conditions, including a minimum lock-in period.
• It is essential to check with your financial institution about their policy on auto-renewals before opening a fixed deposit.
• Always review the renewal and withdrawal policy before investing.

FAQs

What happens if I don't renew or withdraw my fixed deposit?

If you do not provide maturity instructions at the time of booking, your funds will be credited to your linked bank account at maturity. However, there will be a reminder of the upcoming maturity of your FD, so that you can decide to renew or withdraw.

What are the penalties for early withdrawal of a fixed deposit?

Shriram Finance FDs follow RBI's NBFC rules on premature withdrawal:

0–3 months: No withdrawal permitted (absolute bar)
3–6 months: Withdrawal allowed, but no interest paid — principal only
After 6 months: Interest paid at contracted rate minus 2%

Can I renew my fixed deposit before it matures?

No. Renewal of a fixed deposit can only be decided on or before the day of maturity, not before. Renewing early would effectively mean closing the existing FD prematurely, which attracts the same withdrawal penalties discussed earlier.

What happens to my fixed deposit if I die before it matures?

If a nominee has been registered, the nominee can claim the deposit as per applicable procedures. If no nominee is registered, legal heirs may claim the deposit subject to documentation requirements.

Can I renew my fixed deposit if I am travelling abroad?

Many institutions allow online renewal. In some cases, formal authorisation or documentation may be required.