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FD - Fixed Deposit

Fixed Deposit Scheme

Last Updated 29th Nov 2021

  • Fixed Deposits also known as Term Deposits are fixed income instruments where the depositor saves money for a fixed time at a fixed rate.
  • Fixed Deposits are provided by Banks, NBFCs and Corporations at comparative factors.
  • FDs are popular as they offer higher interest rates compared to savings deposits.
  • Fixed deposit provides additional returns to senior citizens.
Rate of Interest 1.75% to 6.95%
Interest payment Monthly, Quarterly or Annually
Tenure 7 Days to 10 Years
Deposit Amount ₹ 100 or No limit
Earn upto 6.95% on FD APPLY NOW

Compare Best Bank Fixed Deposit Scheme in India

Bank FD Tenure Interest Rates
SBI Fixed Deposit 7 Days - 10 Years 2.90% - 5.40% Explore More Calculator
HDFC Bank Fixed Deposit 7 Days - 10 Years 2.50% - 5.50% Explore More Calculator
ICICI Bank Fixed Deposit 7 Days - 10 Years 2.50% - 5.50% Explore More Calculator
Axis Bank 7 Days - 10 Years 2.50% - 5.75% Explore More Calculator
ICICI Home Finance 12 Months - 120 Months 4.30% - 6.45% Explore More Calculator
Kotak Bank 7 Days - 10 Years 2.50% - 5.30% Explore More Calculator
PNB Housing Finance 12 Months - 84 Months 5.90% - 6.70% Explore More Calculator
IDFC First Bank 7 Days - 10 Years 3.00% - 5.75% Explore More Calculator
Bank of Baroda 7 Days - 10 Years 2.80% - 5.25% Explore More Calculator
Citibank 7 Days - 1825 Days 2.40% - 3.50% Explore More Calculator
IDBI Bank 7 Days - 20 Years 2.70% - 5.40% Explore More Calculator

What is Fixed Deposit?

Fixed Deposits also known as ‘term deposits’ or ‘time deposits’ is a low-risk financial instrument that is offered by banks, post offices or Non-Banking Financial Companies (NBFCs). The duration of a fixed deposit may vary from 7 days to 10 years, wherein you can invest your funds for a fixed period and earn returns. The returns earned on FD varies across all fixed deposit providers, and currently ranges between 1.75% to 6.75%. Fixed deposits are safe investment options, as deposits up to ₹ 5,00,000 are insured by the Government.

Type of Fixed Deposit

You can invest your money as per your convenience and investment needs in different types of fixed deposits. These are:

  • Regular Fixed Deposit: In a regular fixed deposit, you can invest your funds ranging from 7 days to 10 years for a fixed period. These deposits are taxable as per your tax slab rate. You can choose cumulative or non-cumulative fixed deposits as per your requirements. In a cumulative FD, interest is paid at the time of maturity, and you can choose to withdraw interest on a monthly, quarterly or half-yearly basis in a non-cumulative fixed deposit.
  • Tax-saving Fixed Deposit: Tax-saving deposits are invested for a lock-in period of 5 years. Under Sec 80 C, you can earn tax deductions up to ₹ 1.50 Lakh in a financial year on these deposits. Unlike regular fixed deposits, investment in these FDs is made as a lump-sum payment.
  • Senior Citizens Fixed Deposit: If you are above the age of 60, you can invest in senior citizens fixed deposits. The rate of interest on these deposits is higher than a regular fixed deposit.
  • Flexi Fixed Deposit: It is a special kind of fixed deposit which combines the features of savings or current account and fixed deposits. Using the auto- sweep facility, the excess funds automatically get transferred from the savings account to fixed deposits.

Who is Eligible to Open a Fixed Deposit Online Account?

The basic eligibility criteria across all FD providers is listed as follows:

  • Individual depositors above 18 years of age and having a PAN.
  • Hindu Undivided Family (H.U.F) with a separate PAN.
  • Minors (those below 18 years of age) under guardianship of a guardian more than 18 years old.

List of Documents Required for Fixed Deposit

To open a fixed deposit, you must satisfy RBI mandated KYC guidelines which include identity, age and address proofs.

  • Identity Proof: Aadhaar Card, Passport, PAN card, Voter ID card, Driving licence, Government ID card, Photo ration card
  • Address Proof: Aadhaar, Passport, Telephone bill, Electricity bill, Bank Statement with Cheque
  • Signature Proof: Passport, PAN card, Driving License

Benefits and Features of Fixed Deposits

A fixed deposit is a risk-free investment instrument that offers assured fd returns at the end of maturity period. Here are some other advantages of investing in FD.

  • Flexible tenure : A fixed deposit offers a tenure ranging from 7 days to 10 years. You can thus choose short term, medium term or long tenure for investment depending upon your reason to invest.
  • Tax Benefits : Under Section 80 C of the Income Tax Act, you can get tax exemption upto ₹ 1.50 Lakh on your FD investment.
  • Liquidity : One of the advantages of a fixed deposit is that it is easily convertible to cash. However, banks may charge a penalty for premature withdrawal.
  • Assured Returns : Fixed Deposits offer fixed returns on the investments as they are not tied to market conditions. Though the interest rate may change over time for new investors, it won't impact the rate you invested in.
  • Loan against FD : In the times of financial needs, you can also avail loan against fixed deposits for upto 90% of the deposit amount at 1-2% above the fixed deposit rate.

Nomination facility on Fixed Deposits

Nomination facility is available for all FD account holders to add a nominee to whom you want to transfer the FD amount in the event of your death. Nomination can be made in favour of a single person only. You can add a nominee in existing or new accounts.

  • All deposit accepting banks, NBFCs, HFC’s and corporates offer nomination facility.
  • Nominee is a person who claims the deposit upon the depositor's death.
  • Without a nominee, money in Fixed Deposit account will not be automatically transferred to the account-holder’s next of legal heirs and the claimants will need to establish their bonafide relationship with the bank.

Nominations can be changed or cancelled by the FD account holder.

Premature Withdrawal on Fixed Deposit

At times, you may need urgent funds and may want to withdraw your fixed deposits before maturity. In common language this is known as breaking a FD. Banks usually levy a penalty at the time of premature withdrawal of FD either by paying lower interest rate on the deposit amount or deducting a penalty amount from the FD.

However, some banks including Yes Bank and Bank of Maharashtra waive off interest penalty on FD if the liquidation is due to some emergency. Some banks also offer the option of partial withdrawal from the fixed deposit account with some penalty.

What is the Revised TDS Rate 2021 for FDs?

In case the interest earned by you on fixed deposits with all branches of a bank in a year exceeds ₹ 40,000, your interest income is subject to 10% tax deduction at source (TDS). Earlier, from 14th May 2020 onwards till March 2021, the TDS rate was revised and cut down to 7.5% to provide relief to depositors in the current COVID’19 pandemic. Remember to quote your IT PAN when opening the term deposit, otherwise the bank will deduct TDS at twice the applicable rate. Also, you can claim credit for TDS exemption on FD only if your PAN is recorded with the bank.

Can I get a Loan against Fixed Deposit?

Banks offer facility of loan against FD to help you tide over temporary shortfalls in funds without the need of breaking their FDs and taking a loss in the form of lower interest or paying a penalty. Here are the features of Loan against FD:

  • Loan against FD can be availed only from the same bank at which the deposit is placed.
  • Most banks allow loans upto 90% of the value of the fixed deposit.
  • Tenure for loan has to be within the balance maturity of the deposit.
  • The interest rate on a loan against Fixed Deposit is usually 0.5% – 2% above the interest rate on the deposit. Loans against bank’s own deposits are exempt from base rate and hence can be offered below the bank’s base rate also.
  • Loan against Fixed Deposit can typically be availed even if the applicant has a poor credit history or CIBIL record and a low CIBIL score. Regular repayment of loan against FD may also help improve one’s CIBIL score.

Fixed Deposit Receipt

A fixed deposit receipt or FDR is a document handed over to you by the bank or the financial institution when you book an FD with them. The receipt is proof and similar to how a bill is handed over at the end of a purchase. It contains information like your name, age, principal amount, deposit tenure, date of booking the fixed deposit, maturity date, the interest rate and the terms and conditions on the FD. The FDR must be kept safe and secure because it is required at the time of FD renewal, premature withdrawals and also if one needs loans against Fixed Deposits.

Compare Bank FD v/s NBFC FD v/s Corporate FD

Bank FD NBFC FD, HFC FD Corporate FD
Safety Highest Typically lower than banks Typically lower than banks
Credit rating Not required Mandatory Mandatory
Interest Rates Depends on the scale of banks. Lower for large banks but higher for small finance banks Higher than banks. Higher the credit rating, lower the rates and vice versa Higher than banks. Higher the credit rating, lower the rates and vice versa
FD Tenure Few days to 10 years 1 year to 5 years 1 year to 5 years
Maturity Options Non cumulative and cumulative Non cumulative and cumulative Non cumulative and cumulative
Coverage under DCGCI Yes, up to ₹ 5,00,000 lakh of deposits in all bank accounts No No
Security None None None
Loan against FD Available at 0.5 – 1.0% over FD rate May be available Not available
Flexi/ Sweep facility Offered by many banks Not available Not available
Frequency of interest compounding Quarterly May vary May vary
Tax deduction at Source (TDS) On interest income of more than ₹ 10,000/ - for a PAN in one bank across branches On interest income of more than ₹ 5,000/ - for a PAN On interest income of more than ₹ 5,000/ - for a PAN
Tax Benefit on FD Available on principal amount for 5 year tax saving deposits under Section 80-C None None
Nomination Facility Available Available Available
Employee FD’s Available; slightly higher interest (upto 0.5%) may be offered Available; slightly higher interest (upto 0.5%) may be offered Available; slightly higher interest (upto 0.5%) may be offered
Special schemes for senior citizens 0.25% to 1.0% higher interest rates 0.25% to 1.0% higher interest rates 0.25% to 1.0% higher interest rates
Shareholder FD’s No extra benefit Slightly higher interest may be offered in some cases Slightly higher interest may be offered in some cases

What is Fixed Deposit Insurance?

Bank FDs are completely safe as retail deposits of up to ₹ 5 Lakh are covered by a guarantee by the government through DICGC. Full form of DICGC is Deposit Insurance and Credit Guarantee Corporation which provides a guarantee known as DICGC guarantee on deposits of up to ₹ 5 Lakh. The insurance limit on FDs have been increased and is expected to reduce the risk of small depositors.

It is important to understand that deposit insurance is available for banks and Small Finance Banks. However, deposit insurance is not applicable to NBFCs and HFCs. In the case of NBFCs and HFCs, it is advisable to invest in AAA rated or highly rated FDs only to reduce the risk on your savings.

Latest News about FD

  • Norms for Interest on Overdue Term Deposits Changed
    As per the new rules, if a fixed deposit matures but the proceeds are unpaid and remain unclaimed with the bank, then the amount which you have not claimed will attract the rate of interest that applies to a savings account or the contracted rate of interest on the matured FD, depending on which one is lower.


How does fixed deposit account work?

A fixed deposit works for the benefit of both the FD provider and holder. While the FD depositor deposits his or her funds in the bank, he or she earns interest on it provided the funds are deposited for a fixed period and not withdrawn before the fixed time. While investing in an FD, you have the option to choose the FD tenure as per your convenience. The tenure ranges from seven days to up to ten years. Each of these tenures has a pre-decide interest rate that will be provided on with the funds deposited.

What happens if you break FD before maturity?

Breaking an FD before the maturity period can cost you a loss on the interest that you can otherwise earn on your FDs. Further, breaking FD prematurely can also lead one to pay the penalty for the same, that may be up to 1%.

What is the penalty for breaking a fixed deposit?

The penalty for breaking a fixed deposit may vary across various banks. However, it usually ranges between 0.5% to 1%. Some banks may however lower the interest rate instead of charging separate penalties.

Can I withdraw FD online?

Yes, you can withdraw FD amount online before FD maturity but banks may levy a penalty by paying lower interest rate or charging a penalty for premature withdrawal.

What is the difference between RD or FD?

Recurring Deposit (RD) lets you deposit a certain amount each month in the account to earn interest on the invested sum for a specified tenure on a predetermined rate of interest. Whereas, Fixed Deposit (FD) is created by investing a lump sum amount for a specified tenure on a predetermined rate of interest.

Can I redeem my fixed deposits before the original term?

Yes, an FD can be closed before its original term. If the FD is closed before completing the original term of the deposit, the interest will be paid as per the interest rate applicable on the date of deposit for the period it has remained with the bank. However, some banks may also levy a penalty prescribed by them on the date of deposit.

Can I opt for an auto-renewal facility while opening a FD?

Yes, you can opt for the auto-renewal facility while opening an FD. It can be opted at the time of investing in Fixed deposit or amidst the FD tenure. When the FD matures, the bank will auto-renew it at the applicable rate of interests.

What is tax saving FD?

The fixed deposit by investing in which you get tax deduction under Section 80C of the Income Tax is tax saving FD. The maximum deduction available is ₹ 1,50,000, with 5 years of the lock-in period. Thereby, in order to avail tax benefit on FDs, you need to deposit funds for a minimum of five years.

How Can I Invest in FD?

There are various offline and online methods to invest in a fixed deposit. To open a fixed deposit account online, one can use modes such as the Internet or mobile banking. Investors can also invest in an FD by visiting a nearby bank branch or through ATMs and phone banking channels.

Can I renew my FD account after its maturity?

On maturity, the customer may renew the bank deposit by contacting the branch. Customers can also place an auto renewal request with the bank for either the maturity amount or only the principal component (in which case the interest, subject to TDS, will get credited to the depositor’s bank account). However, the rate of interest on renewal of FDs will be as per the prevailing rate at the time of FD maturity.

Why invest in Fixed Deposit?

You must invest in a fixed deposit to earn fixed and assured returns on your deposits for a short term ,medium term or long term. As per the current rates, RBL Bank provides highest return on your fixed deposit upto 6.75%.

Can we change the nominee in fixed deposit?

Yes, you change the nominee in fixed deposit anytime during the investment tenure through various modes. These modes include mobile banking, internet banking or visiting the bank branch.

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Our News - Nov 2021
  • 2021-11-23 : Federal Bank Revises FD Rates
    Federal Bank has revised FD rates for different tenures. After the change in FD rates, regular investors can earn upto 5.60 percent. The highest FD rate for senior citizens is 6.25 percent on less than Rs 2 crore deposits maturing in 5 years or more.
  • 2021-11-15 : Central Bank of India Revises Fixed Deposit Interest Rate
    Central Bank of India has revised the interest rate for fixed deposits on different tenures. The bank is offering an interest rate of 2.75% for 7 -14 days and 5.00% for 5 year to 10 year tenure.
  • 2021-11-09 : Indian Bank Slash Fixed Deposit Interest Rate
    Indian Bank has revised the interest rate for fixed deposits on different tenures. Currently, the bank is offering a highest interest rate of 5.25 percent for 5 year tenure. Senior citizens fd rates are 0.50 percent higher than the general rates.
  • 2021-11-08 : Yes Bank Revises Fixed Deposit Rates
    Yes Bank has revised fixed deposit rates for various tenures. The rates are revised for general customers and senior citizens. Interest rate for 7 days to 14 days tenure is 3.25 percent and 4 percent on 46 to 90 days tenure.
  • 2021-11-01 : Jammu and Kashmir Bank Revises FD Rates
    Jammu and Kashmir Bank has revised the interest rate for fixed deposits on different tenures. The bank is offering an interest rate of 5.30 percent for 3 year to 5 year tenure. Senior citizens will get a 0.50 percent higher interest rate than the general rate.
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