Maturity

FD maturity is when the agreed-upon tenure expires. On this date, a cumulative FD pays out the full amount (principal + compounded interest), while a non-cumulative FD returns only the principal (since interest was already paid periodically). Most banks offer auto-renewal — if you don't withdraw within a grace period (typically 7-14 days), the FD renews at the prevailing rate for the same tenure. This can work for or against you depending on rate movements. You can set maturity instructions in advance: auto-renew, transfer to savings account, or transfer to another FD. Premature withdrawal before maturity is allowed but attracts a penalty — usually 0.50% to 1.00% reduction on the applicable rate. Some banks also have a minimum lock-in period (often 7 days) before even premature withdrawal is permitted.