Can We Break RD Before Maturity?

Investing in a Recurring Deposit (RD) is a favoured investment choice in India. This investment avenue presents the advantage of depositing a fixed sum of money at regular intervals, ensuring a consistent income stream. Although RD is considered a reliable and secure investment option, you may be required to break your RD before the maturity date.

The question arises: Can we break RD before maturity? Let’s explore this matter further to gain clarity.

Can I Withdraw Money from My RD Account Before Maturity?

Unlike a savings account, you cannot withdraw the deposited amount in your RD account anytime you wish to. It is usually possible to break a recurring deposit (RD) before its maturity, but it may incur penalties or a reduction in the interest earned.

Recurring deposits allow premature withdrawal, but there are some rules and conditions that you need to keep in mind before you make an early withdrawal.

Rules for premature RD amount withdrawal

A premature withdrawal of the amount in your RD account is not recommended, but sometimes you might just have to give in and withdraw with no other options left. Therefore, there are some rules about this withdrawal. They are as follows:

  • Most banks only accept one withdrawal before your RD account matures. Moreover, this premature withdrawal RD amount should be a maximum of 50% of the deposit in the account.
  • Premature withdrawal is only allowed if your RD account has been operational for one year and you have made at least 12 monthly deposits.
  • You need to repay the premature withdrawal funds in either a series or lump sum.
  • The withdrawal amount should only be in the multiples of ₹5.
  • If you don’t repay the prematurely withdrawn amount before your RD account reaches maturity, the bank or financial institution will deduct it with interest after it matures.
  • Depending on the bank, they may or may not charge an interest rate on the prematurely withdrawn RD amount.

Conditions of Premature Withdrawal of RD

The premature closure of RD is allowed in most banks and financial institutions, followed by some rules. Again, there are some conditions for early withdrawal depending from bank to bank. Let’s look at some of the most common conditions:

  1. Partial RD Withdrawal

    Depending on the financial institution, some of them have the facility to partially withdraw from your RD account before it reaches its maturity date. Some banks may even allow for a partial money withdrawal from RD before maturity only after making certain deposits; some may allow partial premature withdrawals after a specific period.

  2. Penalty

    You may have to incur a penalty for withdrawing from your RD account before its maturity period. The penalty amount will differ from bank to bank and the type of RD scheme you choose. Also, the penalty may be charged on the amount accumulated, or sometimes it’s charged on the interest earned.

  3. Lost Interest Rate

    You earn a decided interest rate on the earnings you deposit in your RD account for a fixed time. But when you break RD before maturity, you may lose the interest rate you would earn on your selected RD scheme.

Learn more- What is a Recurring Deposit? How Does an RD Work?

What Documents Are Required to Withdraw Money from RD Account Before Maturity?

Before you go ahead to withdraw money from your RD account before maturity, there are some documents you should have handy. These include:

  • Address proof
  • ID proof
  • Receipt of your RD account

Depending on the bank and the RD scheme, the documents required to break RD before maturity will differ.

Should I Make a Premature Withdrawal on My RD?

The decision to break or close an RD prematurely depends on your circumstances. Breaking or closing an RD should be considered as a last resort when all other options have been exhausted. It is advisable to explore alternative methods of arranging funds if they are available to you. However, if you have no other choice but to make a premature withdrawal, it is crucial to ensure timely repayment. Failure to do so may result in the RD not delivering the intended benefits it was designed for.

To get accurate information about the terms and conditions regarding early withdrawals from a recurring deposit, it is advisable to directly contact your bank or financial institution. They will be able to provide you with the specific details and guide you through the withdrawal process.


Can I withdraw RD anytime?

There’s a set maturity period in which your entire RD scheme will exist. If you withdraw money from your RD account before maturity, you may lose the interest rate earned on it and might also need to pay penalties for early withdrawal.


Can I withdraw the entire amount as part of a premature withdrawal?

No. As per the rules, the maximum amount for premature withdrawal of RD is 50% of the deposited amount in your account.


Is it mandatory to keep the account operational for a particular number of years before premature withdrawal?

Yes, you need to make monthly deposits to your RD account for at least 12 months before making a premature withdrawal.


Will the bank levy a penalty for premature RD closure or withdrawal?

If you are looking to close your RD account prematurely or want to withdraw money from your RD account before maturity, you will incur some penalties either on the deposited amount or the interest rate.


Can I repay the withdrawn amount?

Yes, you need to repay the prematurely withdrawn RD amount before your RD account hits the maturity period.