Can I make periodic interest-bearing withdrawals from my FD account?

Financial institutions offer non-cumulative FDs, which allow monthly income through regular interest payouts without touching the principal. Monthly, quarterly, half-yearly and yearly interest payout options are available, where the interest earned is paid out at regular intervals, but the principal remains locked in for the full tenure and continues to earn interest.

If you want to withdraw part of the principal before maturity, it is considered a premature withdrawal and usually attracts a penalty and reduced interest rate for the period the deposit was held. Partial withdrawals are generally not allowed unless the FD scheme specifically permits it.

Alternatively, some banks and NBFCs allow you to take a loan against your FD, enabling you to access funds without breaking the FD and losing interest.