Do You Know What Happens to a Fixed Deposit After Maturity?

According to the latest reports, more than Rs. 82,000 crores of investor wealth is lying unclaimed in forgotten and lost investments. As a Fixed Deposit (FD) assures fixed returns and its interest rates do not fluctuate based on market conditions, it needs less monitoring than other investment options like stocks and mutual funds. However, you need to be attentive to the maturity date because your fixed deposit is prone to auto-renewal or auto-liquidation if you do not claim your fixed deposit on maturity.

As a Fixed Deposit is the best way to invest your savings and multiply your wealth without risk, every investor knows exactly what happens to a fixed deposit on maturity. But most of them are unaware of what happens to a fixed deposit after maturity. This article will help you understand what happens in the background after your FD matures.

Important Terms on Renewal and Withdrawal of FDs

Here are five essential terms you must know if you book a fixed deposit with any bank or NBFC (Non-Banking Financial Company) like Shriram.

• Withdrawal – The investor can withdraw the principal amount and the accrued interest when the fixed deposit reaches maturity.
• Renewal – The investor can renew the FD for the same or a different tenure according to their convenience once the FD reaches maturity. NBFCs like Shriram offer 0.25% per annum on all renewals.
• Auto-Withdrawal – The bank or NBFC will automatically credit the maturity amount to the investor’s bank account linked with the fixed deposit.
• Auto-Renewal – Upon investor’s instruction while opening an FD, banks or NBFCs will renew the FD for the same tenure as the existing FD at the current interest rate.
• Premature Withdrawal – In an emergency, an investor can break an FD and withdraw the amount before maturity. However, premature withdrawal is subject to penalty depending on the respective banks and NBFCs.

Fixed Deposit on Maturity – Withdrawal

A fixed deposit on maturity must either be closed or renewed. For an FD closure, a Fixed Deposit Receipt (FDR) is an essential document. Every investor will receive an FDR while opening a fixed deposit account. This receipt will enclose information like the investor’s name, maturity amount & date, interest rate, deposit type, other charges and nomination details. Once your FD matures, you can close your FD account by submitting the FDR to your bank or NBFC, who will verify the details and credit the maturity amount to your bank account.

Fixed Deposit on Maturity – Renewal

You can renew your fixed deposit at maturity by producing the FDR to the respective bank or NBFC from which you have booked your FD. Upon successful verification, banks or NBFCs will renew your fixed deposit for the same tenure and at the current interest rate. This is an excellent option for investors who have invested in an FD with long-term financial goals.

Fixed Deposit After Maturity

If you do not claim or take any action after your fixed deposit matures, banks and NBFCs will take the following steps on your fixed deposit.

Auto-Liquidation – Auto-liquidation is the most common process most financial institutions follow after a fixed deposit matures and remains unclaimed. The respective banks and NBFCs will liquidate the maturity amount (principal + accrued interest) and transfer it to the savings account of the investor.

Auto-Renewal – In this process, the banks or NBFCs will extend your FD to another year or renew it for the same tenure as your existing FD.

Never Miss your Maturity Date

Investors must be very attentive toward their fixed deposit maturity dates. They can even track the maturity dates using their fixed deposit receipt. One of the best ways to track your maturity date is to book an FD online with Shriram. Shriram grants an online fixed deposit receipt and sends a copy to you via email upon opening an FD. Hence you can always check your FD maturity dates online to stay acquainted with all the details. What are you waiting for? Book an FD with Shriram, the NBFC that offers one of India’s highest interest rates of up to 8.75%.

Key Highlights

• According to the latest reports, more than Rs. 82,000 crores of investor wealth is lying unclaimed in forgotten and lost investments.
• A fixed deposit assures fixed returns, and its interest rates do not fluctuate based on market conditions, so a fixed deposit needs less monitoring than other investment options like stocks and mutual funds.
• You need to be attentive to the maturity date because your fixed deposit is prone to auto-renewal or auto-liquidation if you do not claim your fixed deposit on maturity.
• You can track your FD maturity date using your Fixed Deposit Receipt (FDR).
• An FDR will enclose information like the investor’s name, maturity amount & date, interest rate, deposit type, extra charges and nomination details.