Can Fixed Deposit be Transferred to Another Person?

Recently, one of my friends asked me can fixed deposit be transferred to another person. I informed her, in India, transferring an existing FD to another person before maturity is generally not permitted as per banking regulations. However, there are limited exceptions and alternative approaches, which I added below for you.

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Can FD be Transferred to Another Person?

1. The original FD holder must first prematurely close the deposit (may incur penalty charges). Funds can then be gifted to another person to open a new FD in their name.

2. If the FD was opened as a "Joint Account with Survivorship", the surviving holder automatically inherits it. Some banks allow adding nominees who receive the FD upon the holder's death.

3. FDs can be transferred posthumously to legal heirs through succession certificates.

4. The recipient may need to pay income tax on accrued interest if the FD is gifted. 

5. If transferred after maturity, the interest income becomes taxable for the new holder. Gifts above Rs 50,000 from non-relatives are taxable under "Income from Other Sources" (Section 56(2)(x) of IT Act).

I hope you found this information helpful.

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Let me explain: Can fixed deposit be transferred to another person? A Fixed Deposit (FD) is a non-transferable investment instrument. Once opened in an individual's name, it cannot be directly transferred to another person. However, certain scenarios allow ownership changes under specific conditions which I have shared below for your reference.

Can FD be Transferred to Another Person?

The specific conditions under which FD’s can be transferred are as follows:

1. Banks allow FD holders to nominate a beneficiary. In case of the FD holder’s death, the nominee can claim the deposit by submitting necessary documents like the death certificate and KYC details.

2. If no nominee is assigned, the legal heirs can claim ownership based on a will or succession laws.

3. If the FD is held jointly, the second holder can inherit it upon the first holder’s demise, provided the account has an ‘Either or Survivor’ clause.

4. The holder can prematurely close the FD, withdraw the amount, and then reinvest it in another person’s name. However, premature closure may attract penalty charges.

5. NRO FDs cannot be transferred to another person, but NRI account holders can convert them into NRE FDs under RBI guidelines.

FDs are generally non-transferable, except in cases of nomination, inheritance, or premature withdrawal. If you want to pass an FD to someone, it is best to either open a joint FD or use a nomination facility for smooth transfer. I hope this answers your query: Can we transfer FD from one person to another.

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Will transferring money from an SBI account to an ICICI account break the flexi FD in SBI?

conditions like joint accounts, nomination, and premature closure for FD reassignment.

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Wondering can Fixed Deposit be transferred to another person. Fixed Deposits (FDs) are popular investment instruments where individuals deposit a lump sum amount for a fixed tenure and earn interest.

How to Transfer Fixed Deposit from One Person to Another?

Generally, FDs are non-transferable, meaning the ownership of an FD cannot be directly transferred from one person to another during its active tenure. However, there are certain conditions and scenarios where aspects of an FD can be transferred or reassigned,

• If an FD is held jointly, the primary holder and the co-holder(s) share ownership. Upon the death of the primary holder, the FD automatically transfers to the surviving joint holder(s).

• An FD account holder can nominate a person who will receive the proceeds of the FD upon the account holder's death. The nominee is not the owner during the FD's tenure but is entitled to the FD amount after the death of the account holder.

• An account holder can choose to prematurely close an FD and withdraw the funds. After withdrawing, the funds can be given to another person, who can then open a new FD in their name. This process incurs a penalty for premature closure, which varies by bank.

• In some countries, FDs can be gifted to another person, which involves closing the existing FD and opening a new one in the recipient’s name. The account holder needs to comply with the bank’s procedures and possibly provide a gift deed.

• Different banks have specific policies regarding the transfer or reassignment of FDs. It’s crucial to consult with the bank to understand the detailed procedures and any legal requirements.

Financial regulations often dictate the terms and conditions under which FDs can be transferred or reassigned. Compliance with these regulations is mandatory. This is all about can Fixed Deposit be transferred to another person.

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