I have terminated a Rs 2-lakh, three-year fixed deposit (FD) from a bank after just one month of making it on 30 April 2008. The bank paid me only Rs 50 as interest, stating the 4 per cent interest was adjusted for penalty charges for premature withdrawal. Is the bank justified in doing so?Yes, the bank is justified in charging you a penalty if you withdraw the FD before the maturity period. The reason being that when you open an FD the bank invests the money in a manner that the returns are much higher than the rate what the bank has promised you.
