PremiumThe premature withdrawal penalty structure for rupee term deposits has been modified by the private sector lender Federal Bank. According to the bank's official website, the new penalty charges will take effect on October 21, 2022. Premature withdrawals from newly opened or renewed rupee term deposits are subject to the new penalty charges. For rupee term deposits under ₹2 Cr, there is no penalty for premature withdrawals if the deposit duration is up to and including 15 days; however, if the deposit period surpasses 15 days, the bank imposes a 1% penalty fee.
While the bank imposes a 1% penalty on premature withdrawals of fixed deposits for periods of up to and including 15 days and over 15 days on single deposits of ₹2 crore and above. For the Smart Deposit Scheme, the bank imposes no penalties on premature withdrawals of fixed deposits booked for up to and including 90 days, however, if the deposit period exceeds 90 days, the bank imposes a 1% penalty.
Federal Bank has mentioned on its website that “Period for which the deposit is maintained with the Bank, irrespective of the contracted tenor. Deposits opened for a period of 2222 days will be treated as Green Deposits and these deposits will be exclusively used for funding Green loan portfolio."
As of Q2 FY23, Federal Bank's standalone net profit improved by roughly 53% YoY to ₹703.7 crore from ₹460.3 crore in Q2 FY22. Net income interest (NII) for the lender climbed by almost 19% YoY, from ₹1,479.4 crore to ₹1,762 crore recorded in the same period last year. Its net interest margin (NIM), on the other hand, increased to 3.30%. Gross non-performing assets (NPA) at Federal Bank were 2.46% as opposed to 2.69% in the previous quarter. However, its net NPA reduced from 0.94% to 0.78% quarter over quarter (QoQ). The gross NPA, at 2.46%, was the lowest in 24 quarters, while its net NPA, at 34 quarters, was the lowest, as per the bank.
The interest rates on Federal Bank's fixed deposits were last updated on September 27, 2022. The bank is now offering interest rates on deposits maturing in 7 days to above 2222 days that range from 3.00% to 6.00% for the general public and from 3.50% to 6.65% for senior citizens. Deposits that mature in 700 days at Federal Bank will earn a maximum interest rate of 7% for the general public and 7.50% for senior citizens.