SBI FD Premature Withdrawal Penalty ?

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HelloMan

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I am unable to understand the greek-language terms in which they have explained the penalty in HERE

My simple questions:
1) If I have a 10k INR 1000days FD in SBI which started on 1/July/2011, and I want to break it on 1/Nov/2012, how much of my initial deposit of 10k will i get in my hand (after paying all penalties)? What about the interest accumulated on the principal till 31/Oct/2012, do i lose all of that?

2) My FDs are getting auto-renewed after their tenure finish. Ex. I deposited 10k in 2008 which matured in 2011 June and got reinvested on 1/July2011 automatically instead of sum getting deposited in bank. Why is this happening? How to stop this? I did not sign up for this and when i break it now, i will pay penalty? Ridiculous.

3) What about the auto-sweep facility of SBI? Whenever my savings amount reach above 5k, it gets sweep down into FD of 1year. Ex. I deposit 25k in savings account, 20k gets sweeped into 1yr FD and 5k remains in savings account. Now if i want to withdraw 15k, that 25k will have to be broken. Will I incur any penalties in that case? Logically, I should not.
 
1. Jul till Nov is >7 days. You would be eligible to get interest. Jul-Nov is <180 days so applicable rate : 91-180 days' rate.
- the applicable rate would be lower of [a] or
[a] 91-180 day rate at the time of your deposit .
91-180 day rate at the time of premature withdrawal.

2. Don't fret & fume: The auto-renewal is always better. That way even if you need the cash almost within the month, you would get the rate that is definitely higher than 4% which is your SB rate. Only issue here is that you need to visit the bank. If it were in the SB a/c you visit the ATM.

If you don't want the auto-renewal happening, there is a specific line in the application / certificate that says "clearance instructions on maturity" (or, something to that effect). Write your instructions clearly (in capitals, to improve legibility - I don't know how good your hand writing is!). That would be it.

3. I don't have this relation with SBI - someone else has to answer this one.
 
Your initial deposit will never decrease.
The only penalty that may be charged is a decreased interest rate. Jambumali has already explained that this interest rate penalty is also still better than keeping the money in your saving account.
 
by the way, why FD ?

Why not open sweep in account ? You get almost same rate as FD (9.x %) & you can withdraw whenever you want.

Point 3 - No penalty.. FD are thing of past now. Sweep in is best.
 
No penalties. If you withdraw within 7 days you wont get any interest. After 7 days you will be paid the appropriate rate for the appropriate number of days the FD is held.

Can anyone explain this sweep facility? Can this be done through online banking like e-deposit?
 
Diff bank calls it diff names. SBI is Sweep in account.

Give them a limit say 5000, It will be liquid money in your account. Anything above 5000 will be parked in seperate account linked to your main account.

Money in Sweep in will earn more interest as high as 9.25 %,

Over the time, you collect 1 lakh rupees in sweeep in & all of a sudden you need, No worries. you can withdraw that 1 Lakh anytime + get interest paid at which is better then FD. No extra charges like FD break etc.

hope you understood.
 
^ I have another query. The sweep in account in SBI (MODS) has a strange feature.
Lets say you have 55k. The amount sweeped in is anything above 5k at the end of the week. So at the end of week1 50k gets sweeped in and 5k remains non sweeped. Now let's say you need 7k at the beginning of week2 and since only 5k is available in non-sweeped in account, so 2k needs to be sweeped out. BUT, the amount which is sweeped out is 10k (or whole 50k i dont remember). Now this is not good as ideally you should get higher interest rate on the remaining 48k but since it is sweeped out, you get just 4% on it.
They say that sweep out can be done in 1k tranches but that is using cheque. If you use ATM, whole amount gets sweeped out as pointed above.
Any clue guys, why this happens and how to avoid this?
 
Suppose I make FD investment for 1 year. This gets renewed every year (assuming i do not take money out after maturity). Let's say this gets renewed for 5th time after 5 years. This now effectively becomes a 5-year FD. Can I (and if yes how) claim income tax benefit under 5yr tax saving FD?
 
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@dragonball The sweep amount is based on first in first out or last in first out policy. ie if sweep out occurs and if your account is set to FIFO, then the first sweep amount (that was sweeped in first) will be sweeped out and vice versa.
You can check more with your bank branch.
 
CeDrIc said:
@dragonball The sweep amount is based on first in first out or last in first out policy. ie if sweep out occurs and if your account is set to FIFO, then the first sweep amount (that was sweeped in first) will be sweeped out and vice versa.
You can check more with your bank branch.
Click to expand...

Maybe I should have created a new thread. My new question is in post # 9. My previous queries have been answered :P
 
dragonball said:
Suppose I make FD investment for 1 year. This gets renewed every year (assuming i do not take money out after maturity). Let's say this gets renewed for 5th time after 5 years. This now effectively becomes a 5-year FD. Can I (and if yes how) claim income tax benefit under 5yr tax saving FD?
Click to expand...
How does it become a 5 year tax saving FD? You are reinvesting each year with the option not to, you could have decided not to renew any year. In case of 5 year tax saving FD, you cannot touch the money before maturity period.
 
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dragonball said:
Suppose I make FD investment for 1 year. This gets renewed every year (assuming i do not take money out after maturity). Let's say this gets renewed for 5th time after 5 years. This now effectively becomes a 5-year FD. Can I (and if yes how) claim income tax benefit under 5yr tax saving FD?
Click to expand...

in addition to what @mathewvp posted above,
You need to specifically select the option of a tax-saving FD while investing. Tax saving tag is not applicable for all 5 year FDs too and there may be a few 5 year FDs which are not under the tax saving category.
 
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