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Fixed Deposit

Fixed Deposit in India

Last Updated 19th Sep 2020

Fixed Deposits also known as Term Deposits or Fixed Deposit Receipt (FDR), is a fixed income instrument where the depositor saves money for a fixed time at a fixed rate. FDs are popular as they offer higher interest rate compared to savings deposits and are safe.

Rate of Interest 2.25% to 7.35%
Interest payment Monthly, Quarterly or Annually
Tenure 7 Days to 10 Years
Deposit Amount ₹ 100 or No limit
Top Providers Banks, NBFCs and Small Finance Banks
Deposit Insurance Available under DICGC for Banks. Not applicable to NBFC FDs.
Popular FD Schemes Regular FD, Sweep-in FDs, Senior Citizens Fixed Deposits and Tax Saving Schemes

Top Bank Fixed Deposit Schemes 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% - 5.50% Explore More Calculator
ICICI Home Finance 12 Months - 120 Months 6.00% - 6.50% Explore More Calculator
Kotak Bank 7 Days - 10 Years 2.75% - 5.25% Explore More Calculator
IDFC First Bank 7 Days - 10 Years 3.00% - 7.00% Explore More Calculator
Bank of Baroda 7 Days - 10 Years 2.90% - 5.30% Explore More Calculator
Citibank 7 Days - 10 Years 2.75% - 3.90% Explore More Calculator
IDBI Bank 7 Days - 20 Years 3.00% - 5.50% Explore More Calculator
Indian Bank 7 Days - 10 Years 2.90% - 5.25% Explore More Calculator
Indian Overseas Bank 7 Days - 10 Years 3.50% - 5.45% Explore More Calculator
OBC 7 Days - 10 Years 3.00% - 5.30% Explore More Calculator
PNB 7 Days - 10 Years 3.00% - 5.30% Explore More Calculator
HDFC 33 Months - 66 Months 6.35% - 6.45% Explore More Calculator
PNB Housing Finance 12 Months - 120 Months 6.20% - 6.70% Explore More Calculator
Allahabad Bank 7 Days - 10 Years 3.05% - 5.50% Explore More Calculator
Andhra Bank 7 Days - 10 Years 3.50% - 5.45% Explore More Calculator
Bank of India 7 Days - 10 Years 3.25% - 5.35% Explore More Calculator
Bank of Maharashtra 7 Days - 10 Years 3.00% - 5.00% Explore More Calculator
Canara Bank 7 Days - 10 Years 3.00% - 5.50% Explore More Calculator
Central Bank of India 7 Days - 10 Years 3.00% - 5.10% Explore More Calculator
Punjab and Sind Bank 7 Days - 10 Years 3.50% - 5.55% Explore More Calculator
UCO Bank 7 Days - 10 Years 3.00% - 5.25% Explore More Calculator
Union Bank of India 7 Days - 10 Years 3.50% - 5.45% Explore More Calculator
United Bank of India 7 Days - 10 Years 3.00% - 5.30% Explore More Calculator
IndusInd Bank 7 Days - 10 Years 3.25% - 7.00% Explore More Calculator
Karur Vysya Bank 7 Days - 10 Years 3.50% - 5.85% Explore More Calculator
RBL Bank 7 Days - 20 Years 4.00% - 7.25% Explore More Calculator
Yes Bank 7 Days - 10 Years 5.00% - 7.00% Explore More Calculator
HSBC Bank 7 Days - 60 Months 2.25% - 4.00% Explore More Calculator
Standard Chartered Bank 7 Days - 5 Years 4.25% - 6.30% Explore More Calculator
LIC Housing Finance 1 Year - 5 Years 5.90% - 6.00% Explore More Calculator
Corporation Bank 7 Days - 10 Years 3.50% - 5.45% Explore More Calculator
Syndicate Bank 7 Days - 10 Years 3.00% - 5.50% Explore More Calculator
DCB Bank 7 Days - 120 Months 4.75% - 6.95% Explore More Calculator
Dhan Laxmi Bank 7 Days - 10 Years 3.50% - 5.60% Explore More Calculator
Karnataka Bank 7 Days - 10 Years 3.50% - 5.70% Explore More Calculator
South Indian Bank 7 Days - 10 Years 3.50% - 5.90% Explore More Calculator
Federal Bank 7 Days - 10 Years 2.75% - 5.60% Explore More Calculator
Jammu And Kashmir Bank 7 Days - 10 Years 3.00% - 5.30% Explore More Calculator
Lakshmi Vilas Bank 7 Days - 10 Years 3.75% - 6.75% Explore More Calculator
Bajaj Finance 12 Months - 60 Months 6.90% - 7.10% Explore More Calculator
DBS Bank 7 Days - 10 Years 2.60% - 5.20% Explore More Calculator
Bandhan Bank 7 Days - 10 Years 3.25% - 6.25% Explore More Calculator
AU Small Finance Bank 7 Days - 120 Months 4.00% - 7.25% Explore More Calculator
Ujjivan Small Finance Bank 7 Days - 10 Years 3.50% - 6.95% Explore More Calculator
Equitas Small Finance Bank 7 Days - 10 Years 3.60% - 7.35% Explore More Calculator
Fincare Small Finance Bank 7 Days - 84 Months 3.50% - 7.50% Explore More Calculator
Jana Small Finance Bank 7 Days - 10 Years 3.50% - 7.50% Explore More Calculator
ESAF Small Finance Bank 7 Days - 10 Years 5.00% - 7.50% Explore More Calculator
India Post Office 7 Days - 5 Years 5.50% - 6.70% Explore More Calculator

Fixed Deposit Account

Fixed Deposits are also known as ‘term deposits’ or ‘time deposits’. Term deposits are considered safest investment option compared to other savings instruments. duration of a fixed deposit may vary from 7 days to 10 years. Key Features are:

  • Definition: Fixed Income Instrument in which depositor saves money with a bank or non-bank in return of a fixed interest rate over a defined tenure.
  • Safety: Deposits up to ₹ 5,00,000 with banks are covered under deposits insurance. However, deposit insurance under DICGC is not available for NBFC deposits and the safety of their deposits are to be evaluated based on their ratings.
  • Rates: As per today’s rate, interest rates on FDs can range between 2.25% to 7.50%.
  • Tenure: Option to choose a FD from 7 Days to 10 Years.
  • FD Renewal: Available as per bank’s discretion and at the rates as applicable at the time of renewal.
  • Loan against FD: Available from the same bank with which you have a FD at 0.75-1% higher rate on FD to help a customer with funds without the need to break the FD.
  • Breaking of FD: Available but with penalty charges in the form of lower interest rate or direct penalties linked to FD amount.
  • Popular FD Schemes: Senior Citizens FD Scheme, Tax Saving Fixed Deposits, FDs of Small Finance Banks along with Regular FD schemes.

Who is eligible to open a Fixed Deposit online account?

Any individual above the age of 18 years and with a separate PAN Card is eligible to open a FD Account by submitting basic KYC Documents. Minors can open an online FD account with a guardian.

  • 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.

All depositors must satisfy RBI mandated KYC guidelines which include identity proof, age proof and address proof, among others.

Can I renew my FD account after its maturity?

On maturity, the customer may renew the bank deposit by contacting the branch. Customer 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.

Is Nomination facility available on Fixed Deposits?

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

  • All deposit accepting banks, NBFC’s, HFC’s and corporates offers nomination facility.
  • Nominee is a person who claims the deposit upon 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 with the bank.

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

Is Premature Withdrawal allowed on Fixed Deposit?

Very often depositors face a situation where they need urgent funds and may want to withdraw their fixed deposits before maturity. In common language this is knows 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.

A fixed deposit receipt or FDR is a document handed over to the depositor by the bank or the financial institution when one books 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 name of the depositor, his or her 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 safely and securely by the depositor because it is required at the time of FD renewal, premature withdrawals and also if one needs loans against Fixed Deposits.

Is FD Taxable?

FD is a taxable instrument. However, there are specific inclusions where one can save tax on FD by opting for a tax saving FD.

Tax Exemption on Principal Amount

Tax exemption on principal amount or amount deposited as FD is available if the investment has been made in a tax saving FD.

Income tax on interest on fixed deposit

Interest on FD is taxed at applicable tax rate to the depositor. Interest on FD’s is taxable on accrual basis which means that even if the depositor will get FD maturity amount and interest at the time of FD maturity, he will pay tax on accrued interest on FD every year.

What is the revised TDS Rate 2020 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 was subject to 10% tax deduction at source (TDS). However, from 14th May 2020 onwards till March 2021, TDS rate has been revised and cut down to 7.5% with a view 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 depositors 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.

FDR

A fixed deposit receipt or FDR is a document handed over to the depositor by the bank or the financial institution when one books 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 name of the depositor, his or her 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 safely and securely by the depositor because it is required at the time of FD renewal, premature withdrawals and also if one needs loans against Fixed Deposits.

How do bank FD’s compare with NBFC FDs and Corporate FDs?

Bank FDs vs. NBFC FDs vs. Corporate FDs

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

Type of Fixed Deposit

There are some different types of fixed deposits where you can invest your money as per your convenience and investment needs.

  • 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 Rs. 1.5 Lakhs in a financial year on these deposits. Unlike regular fixed deposits, investment in these FD is made as a lump-sum payment.
  • Senior Citizens Fixed Deposit: Individuals above the age of 60 can invest in senior citizens fixed deposit. The rate of interest on these deposits is higher than a regular fixed deposit.
  • Flexi Fixed Deposit: It is a special kind of fixed deposits 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.

What is Deposit Insurance?

Bank FDs are completely safe as retail deposits of up to Rs 5 lakh are covered by a guarantee by 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 in the latest Budget 2020 and is expected to reduce the risk of small depositors.

It is important to understand the 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.

Who can issue a fixed deposit?

A fixed deposit may be issued by any of the following entities:

  • Scheduled banks operating in India including public sector banks, private banks and foreign bank branches operating in India
  • Small Finance Banks
  • Deposit taking NBFC’s permitted by the RBI to accept deposits
  • Housing Finance Companies regulated by the National Housing Bank
  • Public Sector Companies and Undertaking
  • Private Sector Companies
  • Cooperative banks

FAQs

What does fixed deposit mean?

A fixed deposit is an investment or a savings options provided by financial institutions like Banks; wherein one can deposit their funds for a fixed period of time and thereby can earn a return on it in the form of pre-decided interests.

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, the investor has the option to choose the FD tenure as per his or her convenience. The tenure ranges from seven days to up to 10 years. Each of these tenures has a pre-decide interest rate that will be provided on with the funds deposited.

Can I withdraw money from a fixed deposit?

Though fixed deposits are investments made for a fixed tenure, yet you can withdraw funds from it under special circumstances. Withdrawing funds prematurely will however lower the return you could otherwise earn on an FD, due to a reduction in interest rate.

What happens if you break FD before maturity?

Breaking an FD before the maturity period can cost the FD depositor a loss on the interest that he or she could otherwise earn on their FDs. Further, breaking FD prematurely can also lead one to pay the penalty for the same.

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%.


Our News - Sep 2020
  • 2020-09-17 : ICICI Bank changed its Fixed deposit rates
    ICICI Bank changed its FD rates effective from 11 September 2020. The FD rate for 7 to 29 days is 2.50%, the rate for 30 to 90 days is 3%, and it stands at 3.50% for 91 to 120 days. Further, the fixed deposit rate for 121 to 184 days is 3.50%, for 185 to less than 1 year it is 4.40% and for 1 year to less than 18 months it is 5%. The rate for 18 months to two years is 5.10%, and for 2 years 1 day to 3 years is 5.15%. The rate for 3 year one day to 5 years is 5.35% and it stands at5.50% for 5 years one day to 10 years.
  • 2020-09-17 : Punjab National Bank changed FD rates
    Punjab National Bank revised its FD rates effective from 1 September 2020. The FD rates for 7 to 45 days is 3%, for 46 to 90 days it is 3.25 and for 91 to 270 days it is 4.40%. The rate for long tenors of 271 days to less than one year is 4.50% and the rate for one year to up to 3 years is 5.25%. Further, the FD rate for above 3 years to 10 years is 5.30%.
  • 2020-09-17 : SBI changed its Fixed deposit rates
    State Bank of India changed its fixed deposit rate. The FD rate for 7 to 45 days is 2.90%, it is 3.90% for 46 to 179 days and 4.40% for 180 days to 1 year. Further, the fixed deposit rate for one year to less than three years is 5.10%, and for three years to less than five years it is 5.30%. The rate for 5 years upto ten years is 5.40%. The revised rates will be effective from 10 September 2020.
  • 2020-09-15 : SBI special FD scheme for senior citizens extended till December 31
    SBI special fixed deposit scheme for senior citizens has been extended. The scheme was launched to provide a higher interest rate to senior citizens in the current falling interest rate scenario. The special FD scheme for senior citizens will be available till year December 31.
  • 2020-08-27 : HDFC Bank revised its FD rates
    With effect from 25 August 2020, HDFC Bank revised its FD rates. The FD rates for 7 to 29 days is 2.50%, and it is 3% for 30 to 90 days. The fixed deposit rates for 91 days to six months is 3.50%, for six months one day to one year is 4.40%. Further, the FD rate for one year one day to two years is 5.10%, and it is 5.15% for two years one day to three years. FD rates for three years one day to ten years stands at 5.30%.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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