Urban Money

Fixed Deposit

A fixed deposit (FD) is one of the best choices when you want to save your money and, at the same time, earn some extra funds in the form of fixed deposit interest. One of the biggest advantages of a fixed deposit is that you can invest a particular amount of money at a fixed rate for a fixed tenure and get back augmented returns.

Types of Fixed Deposits

Fixed Deposit accounts can be classified into different categories depending on the benefits they offer. We have listed all different types of fixed deposits accounts below: 

Regular FD Account

Individuals below the age of 60 can opt for regular FDs at interest rates lower than what is offered to senior citizens.

FD Account for Senior Citizens

Reserved only for senior citizens (above the age of 60), the rate of interest is higher compared to usual FD types. Individuals with this type of fixed deposit account can use the monthly interest amount as a payout for their expenses.

Corporate FD Account

All the corporate firms get different fixed deposit rates and tenures from different banks. Firms can deposit their profits and funds for a tenure they want.

Tax-Saving FD Account

Tax-saving FD accounts have a minimum lock-in period of five years. With this, you can save your tax (Under Section 80C of the Income Tax Act, 1961) and avail of FD benefits.

NRO FD Account

An NRO FD account can be opened jointly or individually by an Overseas Citizen of India (OCI), Person of Indian Origin (PIO), and Non-Resident Indian (NRI). Only the income which is earned in Indian currency can be deposited in NRO FD accounts.

NRE FD Account

An NRE FD account can be opened by two or more NRIs. This FD account helps in converting foreign currency into Indian money. Also, the interest earned and the amount is repatriable.

FCNR FD Account

The FCNR (Foreign Currency Non-Repatriable) FD account can be opened by NRIs wherein they can deposit their overseas earned money in India. US Dollars, Pounds Sterling, Euro, Japanese Yen, etc., are acceptable. These accounts also provide the best FD interest rates.

Fixed Deposit Interest Rates

Check out the FD interest rates across the top banks of India. Compare the fixed deposit interest rate for normal and senior citizens and choose what suits you best.

 
List of Banks Regular Citizens (p.a.) Senior Citizens (p.a.)
Citibank 2.75% to 4.00% 3.25% to 4.50%
HDFC Bank 3.00% to 6.00% 3.50% to 6.50%
Kotak Bank 3.00% to 5.60% 3.50% to 6.10%
IDBI Bank 3.10% to 5.90% 3.60% to 6.40%
ICICI Bank 3.25% to 5.75% 3.75% to 6.25%
State Bank of India 3.30% to 5.70% 3.80% to 6.50%
Axis Bank 3.50% to 6.10% 3.50% to 6.75%
Punjab National Bank 3.50% to 5.75% 4.00% to 6.25%
Bank of Baroda 3.50% to 5.70% 4.00% to 6.20%
Oriental Bank of Commerce 3.50% to 5.75% 4.00% to 6.25%
Indian Bank 3.75% to 5.75% 4.25% to 6.25%
Allahabad Bank 3.75% to 5.75% 4.25% to 6.25%
IDFC First Bank 4.00% to 7.25% 4.50% to 7.75%
Indian Overseas Bank 4.50% to 5.75% 5.25% to 6.50%
PNB Housing Finance 7.20% to 7.75% 7.45% to 8.00%

Features of a Fixed Deposit Account

Here we have listed all the fixed deposit features and benefits. Know why a fixed deposit is best for you.

  • Tenure of FDs ranges from seven days up to ten years (varies as per banks).
  • Return on investment is compounded periodically, monthly, quarterly, or annually.
  • Senior citizens have 0.5% higher returns than normal citizens.
  • Investors can invest the amount anywhere.
  • Loans against FD are available.
  • Partial and premature withdrawals are available but with penalties.
  • It offers tax-saving FDs schemes.
  • Provides higher returns for an extended period.
  • Considered safe investment options under the Reserve Bank of India.
  • Compound interest helps in growing the invested amount at a greater speed.

Eligibility Criteria for FD Investment

The eligibility criteria to open an FD account in India depends on the category of individuals, organizations and associations as mentioned below.

  • Indian residents (minor, adult and senior citizens)
  • HUFs
  • Joint account holders
  • Specially abled
  • NRIs (Non-Resident Indians)
  • Sole Proprietorship
  • Clubs, societies, trusts, associations, etc.
  • Religious Institutions
  • Educational Institutions
  • Partnership Firms

Documents Required for Opening an FD Account

You can use the following documents as your identity proof, address proof and birth date proof for opening a fixed deposit account.

Identity Proof

  • Passport
  • PAN card
  • Voter ID card
  • Driver’s license
  • Aadhaar card

Address Proof

  • Copy of your Passport
  • Copy of your Aadhaar card
  • Copy of your bank statement along with a cheque

Proof of Birth Date

  • A service discharge certificate
  • Copy of your PAN card
  • Copy of your Aadhaar card
  • Voter ID card

Tax Benefit on Fixed Deposit

All the individual account holders can get an income tax exemption for the maximum amount of Rs. 1.5 lakh, as per Section 80C of the Income Tax Act, 1961. Further, for all the joint accounts holders, this tax benefit is only available for the primary account holder. The other account holder is not able to claim the same tax benefit.

Frequently Asked Questions (FAQs)

Ques: Which type of FD is best?

Ans: A fixed deposit, in general, is one of the safest investments for anyone in India. But, there are a few types of FD schemes that are best suitable for certain criteria.

For senior citizens, a regular or senior citizen FD account is best as they earn more interest than normal citizens and can take out the interest amount every month.

Similarly, for NRIs, an FCNR FD account is best as it allows them to use foreign currencies to open and maintain such accounts. On the other hand, a tax-saving FD is best suited for a salaried person.

Ques: What are the benefits of investing in FDs?

Ans: You can avail of tax benefits, earn from FD interest rates, and save money for the long haul.

Ques: Is fixed deposit risk-free?

Ans: Yes, a fixed deposit is a risk-free investment as FD interest rates are unaffected by any change in the market.

Ques: What is the minimum tenure requirement for a fixed deposit?

Ans: The minimum period for a fixed deposit is 7 days.