Fixed Deposit (FD) is an investment of specific amount for the fixed period of time. It is a financial instrument provided by the banks and other financial institutions that yields the assured returns at minimal or no risk. The returns on these deposits are comparatively higher than that on a regular savings account. The amount deposited in these accounts are locked-in for the fixed period of time and are paid back along with interest accrued. Investment in the fixed deposit is the best option for those who want to make a lump sum investment and receive regular income at specified intervals.
The interest rate on fixed deposits depends on factors like the period of investment, amount of investment and category of the individual. Some banks provide an extra interest over and above the regular rate of interest to the senior citizens. The rate of interest of some banks are given below:
|Bank Name||Tenure||FD Interest Rate (p.a.)|
|SBI||7 days - 10 years||2.90% - 6.20%|
|HDFC Bank||7 days - 10 years||2.50% - 6.25%|
|Axis Bank||7 days - 10 years||2.50% - 6.05%|
|Bank of Baroda||7 days - 10 years||2.80% - 5.75%|
|ICICI Bank||7 days - 10 years||2.50% - 4.25%|
|Punjab National Bank||7 days - 10 years||3.00% - 5.80%|
|IDBI Bank||15 days - 20 years||2.90% - 5.60%|
|Canara Bank||7 days - 10 years||2.95% - 6.00%|
|RBL Bank||7 days - 10 years||3.25% - 7.25%|
|Yes Bank||7 days - 10 years||3.50% - 7.50%|
|PNB Housing Finance||Upto 10 years||5.74%-9.38%|
|DCB Bank||7 days - 10 years||4.75%-7.45%|
|IndusInd Bank||7 days - 10 years||3.00%-8.30%|
The fixed deposit calculator helps to identify the maturity value of the deposit. It reveals the value of interest receivable at the end of the investment period. It even helps in deciding the investment amount and tenure of deposit. By using this, the depositor can compare the returns offered by various banks at different intervals. To check the maturity value the user needs to feed the amount of investment, tenure and the rate of interest prevalent on that tenure in the fixed deposit calculator. Also, feed the interest payment frequency to get the accurate results. Once all the required information is entered, the calculator automatically computes the result.
There are two ways of calculating interest on fixed deposit namely, simple interest and compound interest. The banks pay both the simple interest and compound interest. The interest on deposits booked for short period of time is calculated at simple interest. Whereas, compound interest is paid on the deposits remaining with the bank for longer duration.
The fixed deposit application process is very simple. The depositor just has to visit the bank branch along with the required documents and submit the KYC form. Some banks even provide the facility of booking the fixed deposit online. The depositor just needs to login the bank's official website and click on apply online tab to fill the online application form. After the submission of the form, the deposit amount is debited from the current/ savings account of the depositor.
The fixed deposit application forms are available at the bank branches. To avail the facility of fixed deposit, duly filled form is to be submitted along with the requisite documents. Fill in the personal details, choose the type of plan you are opting for and select the interest payout option. Provide the maturity details and the details of the nominee. The form comprises of the following fields :
Following individuals and groups are eligible to invest:
|An Individual, Hindu Undivided Family, Sole Proprietorship Concern|
|Associations / Clubs|
|Public or Private Limited Companies|
|ID Proof||Address Proof|
|PAN Card||Telephone Bill|
|Driving Licence||Electricity Bill|
|Voter ID||ID Card Issued by Post Office|
|Government ID Card||Bank Statement with Cheque|
|Senior Citizen ID Card||Any other ID proof or address proof document can be submitted subject to bank's satisfaction|
Checking the credit rating of banks/NBFCs offering fixed deposits will give you an impression of the lender. The rating determines the safety of your money invested in FDs. Rating agencies such as Fitch, Moody's, ICRA and others rate the fixed deposits based on the overall liquidity situation, profitability of the bank/NBFC, etc. If these turn good, the fixed deposit would most likely be AAA, AA and A, indicating a high level of safety. If the financials of the bank/NBFC is not up to the mark, ratings such as BBB, BB, B, C or D can be assigned. Fixed Deposits having such ratings might offer greater returns but at the expense of greater risks.
Under Section 80C of the Income Tax Act, 1961 the applicant can avail the benefit of saving taxes on the fixed deposits. This facility is available in both the government and the private sector banks. The minimum investment amount is INR 100 whereas, the maximum permissible amount is INR 1,50,000. Under this plan, the amount cannot be withdrawn before the lock-in period of 5 years. The interest receivable can either be withdrawn or reinvested along with the principal depending upon the options offered by the bank.
There are several benefits of investing in fixed deposits. Few of them have been listed below :