Sri Lanka Fixed Deposit Premature Withdrawal Calculator

When you close a term deposit before its maturity date, the bank does not honour the rate on your certificate. Under the Central Bank of Sri Lanka's Financial Consumer Protection framework, each licensed bank must disclose its own premature-withdrawal terms — the method, the penalty margin and the minimum retention period. The mechanism is the same across BOC, People's Bank, Commercial Bank, HNB, Sampath and NSB; only the numbers differ, so this tool lets you enter your bank's figures and ships the common defaults.

Interest on a premature withdrawal is simple interest on the completed period. Let P be your principal, t the time held in years (months ÷ 12, or days ÷ 365), and T the original tenure in years. The tool applies whichever of three methods your bank uses:

• Reduced rate + penalty (default) — the bank pays the rate it would have offered for a deposit of that shorter tenor (r_a, read off its board), less a penalty margin m: interest = P × max(0, r_a − m) × t.
• Percentage of contracted rate — some banks and finance companies pay a fixed fraction k (e.g. 60%) of your original contracted rate r_c: interest = P × (r_c × k) × t.
• Flat reduced rate — a single savings-like rate is applied for the elapsed period with no separate margin.

Two rules sit on top. First, the minimum lock-in: if the time held is below the retention period (often 3 months), interest is zero and only your principal is returned. Second, the monthly-interest clawback: if interest was paid out monthly at the contracted rate, the bank recomputes the lower premature entitlement and recovers the over-payment from your principal (clawback = max(0, already_paid − earned)).

Finally, 5% Advance Income Tax (AIT) is withheld on the interest unless you are exempt, so net interest = interest × 0.95, and the amount you receive today is P + net interest (or P − clawbackfor a monthly-interest FD). The tool reports interest forfeited two ways — against your contracted rate over the same elapsed period, and against holding all the way to maturity — plus the effective annualised return you actually achieved. Every figure is cross-checked by reconstructing the implied rate from the interest and confirming it matches the method's rate.

• Central Bank of Sri Lanka — Financial Consumer Protection framework (deposit-conduct disclosure)
• Bank of Ceylon — Fixed / Term Deposit terms & conditions
• Commercial Bank of Ceylon — Fixed Deposit terms (premature withdrawal clause)
• People's Bank — Fixed Deposit terms (premature encashment)
• Inland Revenue Department — 5% Advance Income Tax on deposit interest

Each bank sets its own penalty margin and minimum retention period, so this tool exposes them as editable inputs rather than hard-coding a per-bank table that would go stale. The mechanism and defaults were last cross-checked against the sources above on 2026-07-18. Always confirm the exact terms on your deposit certificate. This is an estimate, not financial advice.