Hi Reddy,
Hope you are doing well. I am happy that you are giving good suggestions as & when needed. Please I am stuck up with some problem, can you give some solution to come out of it.
I am an NRI & having my NRE a/c in hdfc bank. I use to create NRE FDs online for periods ranging from 2 years to 8 years. Sometimes I use to break my existing FDs to create new FDs as & when there was an increase in interest rates. In hdfc whenever i break my FD after minimum 1 year duration there are no preclosure penalties.
Secondly, there was a time when interest rates in hdfc was coming down & I choose to open my another NRE a/c in karur vysya bank. Then I regularly transfer my funds from hdfc to karur vysya & started making FDs. Here the blunder mistake I did was I have created all my FDs for a duration of 10 years thinking that, I can preclose my FDs at anytime like in hdfc whenever there is increase in interest rate & I thought that like in hdfc here in karur vysya also there wont be any preclosure penalties. In fact after several months it was confirmed by KVB branch manager also there will not be any preclosure penalties for NRE FDs after one year duration.
Now I went to break my one FD in KVB which was for 7% interest & duration of 10 years, I found there was a penalty deduction even after 1 year also. I surprised & when I contacted branch, they said there will be penalty in their bank for any FD preclosure. So I am in big trouble now & I donot have the proof of previous bank branch manager who told there is no preclosure penalties.
So I am stuck up now because I have many FDs with 7% interest & for duration of 10 years & few FDs completed 1-2 years. Now to preclose & to re-invest in FDs for revised higher interest rate I have to pay huge penalties.
Sorry, my question become lengthy, please advice me in this regard at your free time.
Rgds,
Rajanna K V
10 Answers
Dear Rajanna,
FDs for 10 years time-line??
Do you have any written confirmation from the KVB manager about the 'no penalty on FD pre-closures'? Was it only through verbal communication?
Did you check in their website about the T&Cs on NRE FD investments??
Dear Reddy, Thanks for your reply.
Regarding preclosure penalty actually the manager told me verbally & that too when I got doubt about the rules. I thought the same rules will be followed in all banks because in hdfc there is no preclosure penalty rule. Yes all my FDs are for 10 years duration. Yes now in their website also it says preclosure penalties applicable for NRE Fds like that. I am unable to understand how the rules can be different in different banks & it was my blinder mistake by considering like same rules of hdfc will apply in karur vysya also. Anyway if you can advice me any solution to get out of this problem I will be grateful.
Rgds,
Rajanna
Dear Rajanna,
As the mistake is from our side (for believing the bank staff blindly & for assuming the T&Cs), can't escape the penalty fee on the Pre-closures (if any).
Kindly do not assume when it comes to T&Cs on investments.
Dear Reddy,
Thank you very much for your reply. Yes I agree with you the mistake was from my side because I thought when in hdfc no preclosure penalty then in other banks also will be same clause. Anyhow I made an overlook.
Now Karur vysya bank people are saying that, they can agree for waiver of preclosure penalties with a condition that, I should re-invest the preclosed FD amount for a period more than the remaining period of the preclosed FD. Here again there is no use for me because at present rate of interest is 7.25% upto 3 years & 7% for 3 years & above. All my FDs are for 10 years with rate of interest 7% only. So no use to preclose with that condition.
So this is my situation.
Rgds,
Rajanna
Dear Rajanna,
Just curious to know that is this privilege offered by the banker through verbal or in written?
Dear Reddy,
Yes, the bank informed through writing in email about re-investing for a period more than the remaining period of preclosed FDs. Again I wrote them by stating there is no use to preclose the existing FD which is at 7% ROI & again re-investing at ROI 7% since prevailing ROI for more than 3 years is 7% only. All my FDs are almost one or two years completed. I had requested them to allow me to re-invest for a duration of 3 years so that ROI will be 7.25%. But, now they didnot reply to my proposal.
Rgds
Rajanna
Dear Reddy,
WISH YOU A VERY HAPPY HOLI,
Reddy there is one good news for me. Karur vysya bank finally agreed for preclosure of my FDs which are for 7% ROI without any penalty but, with a condition of re-investing again in FDs in their bank only. On the otherhand, they agreed for re-investment in FDs for duration of 1 year & 2 years. Now I started preclosing my existing FDs & creating new FDs for 1 & 2 years tenure. One more thing is for the preclosed FDs the system is deducting the penalties as I am closing through online & the bank people manually reversing the deducted penalty back into my savings account. So I must be happy for this because atleast my funds will be free after 1 year & 2 year.
Thank you very much for your valuable time to guide me in this.
Rgds,
Rajanna K V.
Dear Rajanna,
Thank you for sharing this information!
This shows that one can/should negotiate with a bank to get the best deals :)
What about the Pre-closure penalty on newly created FDs now and in future? Will they charge the penalty?
Dear Reddy,
Bank will not remove the preclosure clause from their website, however to be on safer side I am creating new FDs for just 1 year & 2 year tenures only. On the otherhand, NRE FDs cannot close before 1 year or else all interest will be lost if closed before 1 year. What I am happy is before all my FDs at 7% ROI are for 10 years tenure & now they will be for 1 year & 2 years. However I have some more FDs for ROI more than 7% & those are also for 10 years tenure. Let me see when the bank increased the interest rates. But, for the moment bank agreed to waive of preclosure penalties for FDs which are only for 7% ROI.
This is that story with Karur vysya bank.
Rgds
Rajanna K V
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