How is the premature deposit interest calculated with the penalty of 1%?
Answers
A customer opens one fixed deposit account for a period of two years at the rate of interest 8.00 % p.a.
Urgently he wants to close the deposit before maturity and the period of deposit is found to be one year only and the rate of interest for one year for the deposit at the time of opening of original deposit is 7,00 % p.a.
Now the interest eligible to be paid to the customer is 7.00 less one percent = 6.00 % p.a.
Normally, banks desist closure of deposits before maturity knowing fully well that the depositor will be losing the amount and in case the period of deposit is already over by three fourth of the period for which the deposit is opened, they will convince the depositor to avail loans upto 90 to 95% of the deposit amount and in this case, the interest outgo will be less than that of the interest lost at the time closing the deposit before maturity