Definition and Function

• Auto-renewal is a facility that automatically renews a fixed deposit upon maturity.
• The principal amount or both principal and interest can be reinvested for the same or revised tenure.
• The deposit is renewed at the interest rate applicable on the renewal date.
• This ensures uninterrupted investment and continued earnings.
• It eliminates the need for manual renewal instructions at maturity.

Activation and Setup

• The option is offered at the time of opening the fixed deposit.
• Customers can choose to activate auto-renewal for principal only or for both principal and interest.
• The instructions are recorded in the FD account details.
• It can also be enabled or modified later through branch or internet banking.
• A confirmation is provided in the FD advice or receipt.

Interest and Tenure Implications

• Renewed deposits earn interest at the prevailing rate on the renewal date.
• The original interest rate does not carry forward after maturity.
• The tenure of renewal usually matches the original term unless specified otherwise.
• The new maturity date and interest rate are communicated to the customer.
• Any changes in interest rates or bank policy affect the renewed deposit.

Premature Closure After Renewal

• Premature withdrawal rules apply to the renewed FD just like a fresh deposit.
• Penalties or revised interest rates may apply if withdrawn before the new term ends.
• Customers can request closure anytime after renewal subject to terms.
• Interest is paid for the completed tenure only, not the full renewed term.
• Renewal does not affect the original TDS or tax-saving status.

Suitability and Benefits

• Ideal for customers who want continuous investment without regular monitoring.
• Helps maintain discipline in long-term saving habits.
• Ensures that maturity proceeds are not left idle in a non-interest account.
• Suitable for cumulative FDs where interest is reinvested automatically.
• Can be cancelled anytime before maturity if plans change.