Kotak FD: Is Your 1-Year Deposit Really Safe?

Kotak Mahindra Bank's 1-year to 15-month FD offers decent rates, but premature withdrawal costs you, and DICGC only covers ₹5 lakh total across all your deposits in that bank. Here's what to know before locking in.

Here's what happened: Kotak Mahindra Bank's callable FDs for tenures of 365 days to under 15 months currently offer rates in the 7.00%–7.40% range, with senior citizens earning an additional 0.50% over regular rates.. Premature withdrawal is permitted on callable FDs, but the payout is calculated at the rate for the actual holding period minus a bank-imposed penalty of typically 0.50%–1.00%, reducing effective returns.. DICGC deposit insurance covers a maximum of ₹5 lakh per depositor per bank — combining principal and interest across all account types — leaving larger FD holders partially unprotected..

What you should do: Add up all your deposits (savings account + all FDs + RDs) at Kotak — if the total exceeds ₹5 lakh, open a second FD at a different bank to stay within DICGC cover.. Submit Form 15G (or 15H for seniors) to Kotak at the start of the financial year if your total income is below the taxable threshold, so TDS is not deducted on your FD interest.. Before breaking your FD early, call Kotak or use net banking to check the exact premature withdrawal rate — calculate whether a liquid mutual fund would have been cheaper than the penalty you'll pay..

If you need a 1-year FD but want flexibility, ladder it: split your amount into three smaller FDs maturing at 12, 13, and 14 months — you avoid breaking the whole deposit if you need only part of the money.