As a form of deposit for a period of 1-month, the bank pays interest on the maturity of the deposit and deduct tax at source. Then the net interest is included as principal (compound interest) and automatically deposited in the next deposit period. If depositor is in need of such deposit, they can withdraw before maturity. If withdrawing any transaction before maturity, the depositor will have to withdraw the whole transaction and the bank will not pay interest on the deposit for that item.