Commonly considered the most secure investment instrument for anyone seeking a stable and steady income in the form of interest, a Fixed Deposit is a safe,secure and stable investment option.Any resident Indian citizen can open a Fixed Deposit Account in India.
Features and Benefits of a Fixed Deposit (FD)
- FD is a financial instrument provided by banks and Non-bank Financial Companies (NBFC).
- Fixed Deposit is a Term Deposit. It has a given maturity date. The maturity date can range from 7 days to a 10-year deposit as per the choice of the investor and the options offered by the bank.
- FD provides a higher rate of interest than a savings bank account. Assured return on investment, in the form of interest, is one of its main features.
- It may or may not require the creation of a separate bank account.
- It has low liquidity. Premature withdrawal of the deposit is possible on fulfillment of certain terms and conditions.
- Interest payments can be received monthly, quarterly, annual, or on maturity. It can be simple interest or compounded, as per the terms of the Fixed Deposit chosen.
- Some banks offer overdraft facility against FDs. This eliminates the need to liquidate your FD in case of an emergency.
- Renewal of Fixed Deposit is very easy.
- Tax is deducted at source (TDS) on the interest on FD, in accordance with the Income Tax Act, 1961.
Documents Required to create a Fixed Deposit
- Identity and Age Proof: Photocopy of Passport, PAN Card, Voter ID Card or any other Government ID Card
- Residence Proof: Photocopy of Passport, Electricity Bill, Telephone Bill, Bank Pass Book, and Statement or any other current proof of residence
- Duly filled application form with a passport size photograph, signature, and name of the nominee
- Original documents for verification on submission of the form and the accompanying photocopies.
FD Interest Rates in India
Fixed Deposit interest rates in India vary from bank to bank. Moreover, some banks may offer a better interest rate for short-term deposits while some banks offer better interest in longer-term deposits. However, all banks provide a better and higher rate of interest to senior citizens.
NBFC’s also offer varying rates of interest from each other. It is always advisable to check credit ratings of these companies before depositing money there. Credit rating is given to the NBFC by certain agencies, after the assessment and evaluation of various risk factors and performance of the NBFC.
Fixed Deposit Calculator
An FD Calculator can be used to calculate the maturity value of the deposit made. It takes into account the deposit amount, the interest rate offered on the specific deposit term or tenure, and the interest compounding frequency – whether it is monthly, quarterly or annual frequency.
The FD Calculator includes FD returns calculator and FD maturity calculator.
Choose the Best Option for Your FD
AU Small Finance Bank consistently offers its patrons high-interest rates. Other features include:
- 5-Year Tax Saving Fixed Deposit
This is a tax saving product with a tenure of 5 years. A minimum deposit of INR 1,000 is required with the maximum being INR 1,50,000, per financial year. This is available to all resident individuals, minors, and HUFs.
- Regular Fixed Deposits
Flexibility, security, and a fantastic return on investment are offered on regular Fixed Deposits. Net banking and the online facility are offered along with monthly and quarterly payout options to choose from.
An added highly beneficial feature is the Sweep-In Facility. This enables you to link your FD to your savings or current bank account. In case of a shortfall of processing a debit instruction in your amount, the exact amount will be funded automatically through a withdrawal against your FD.
Learn more about how does bank calculate interest on FD(Fixed Deposits)