SBI lists a 0.50 percentage point premature withdrawal penalty for domestic retail term deposits up to Rs 5 lakh. Its interest rate page explains that the reduced rate is based on the period the deposit actually remained with the bank. Breaking an FD therefore requires more than subtracting a percentage from the originally promised maturity amount.
This explanation uses the penalty table on SBI's official interest rate page, checked on 1 November 2026 at 21:50 IST. The page labels this penalty schedule effective from 1 April 2017 and shows a page update of 15 October 2026. The 0.50 figure below is a penalty adjustment, not a current FD interest rate.
| Deposit category shown in the penalty table | Listed penalty, all tenors |
|---|---|
| Retail term deposit up to Rs 5 lakh | 0.50% |
| Retail term deposit above Rs 5 lakh but below Rs 2 crore | 1% |
| Deposit held for less than seven days | No interest payable |
How are SBI FD premature withdrawal charges calculated?
The starting point is the rate applicable when the deposit was opened for the length of time it actually stayed with SBI. The bank then applies the relevant reduction stated in the schedule. The deposit's original maturity rate may relate to a longer tenure and cannot simply be carried across to a shorter holding period.
For example, assume a deposit of Rs 1 lakh and an applicable rate of 6% for its actual holding period at the time it was opened. This 6% is a hypothetical input, not a quoted SBI offer. A reduction of 0.50 percentage point gives 5.50%. It does not mean subtracting 50% of the interest or taking 0.50% of the principal as a standalone cash charge.
To isolate the size of the rate adjustment, simple interest difference = principal multiplied by rate difference multiplied by days divided by 365. On Rs 1 lakh for 180 days, the illustration is Rs 1,00,000 multiplied by 0.005 multiplied by 180 divided by 365 = Rs 246.58. This measures only the rate difference under a simple interest assumption. It is not the bank's final settlement calculation.
Why can the maturity estimate and closure proceeds differ?
There are two separate effects in this example: the rate for the shorter actual tenure, and the penalty reduction from that rate. Comparing only the advertised full tenure rate with the final credit can combine those effects. Interest payout arrangements also matter when reconciling amounts already credited and the closure statement.
SBI's page describes quarterly compounding for its special term deposits and different payout arrangements for ordinary term deposits. Its fixed deposit product page also describes quarterly payment or payment at maturity, with other intervals available under stated conditions. The simple interest illustration above does not reproduce those product specific cash flows.
Which deposit terms need checking before closure?
Check the deposit amount, opening date, actual holding period, product name and payout arrangement against the bank's closure calculation. The seven day rule on the penalty page is particularly important for a deposit being closed soon after opening: the page says no interest is paid where the deposit remained for less than seven days.
There is a scope limit in the published pages. The penalty table uses a Rs 2 crore boundary, while the fixed deposit product page classifies Rs 3 crore and above as bulk deposits. This explainer does not infer a penalty for the Rs 2 crore to below Rs 3 crore band from those differing labels. A deposit in that band requires its applicable terms to be established separately.
For nearby finance questions, our deposit insurance guide explains account aggregation. The SIP calculation example and home loan EMI example explain different calculations. This article explains SBI's published withdrawal schedule and does not rank savings products.
