If you pre-close your FD, interest is calculated based on the actual tenure you held the deposit. A 1% penalty is deducted from the applicable interest rate for that period.
For example, if a 1.5-year FD offers 9% interest but you close it after 12 months, and the 12-month rate is 8.75%, you will receive 7.75% interest (8.75% - 1% penalty).