Money won’t grow in your mattress.
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    1 Year to 5 Years
    7.49% - 8.19% Monthly compounding
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    5% - 7.8% Quarterly compounding
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    7 Days to 10 Years
    4% - 7.25% Quarterly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4.25% - 7.05% Monthly compounding
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    15 Days to 20 Years
    4.25% - 7.25% Monthly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4% - 7% Monthly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 5 Years
    6.5% - 6.8% Monthly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 10 Years
    6% - 6.75% Monthly compounding
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    Up to ₹1Cr
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    6.25% - 6.5% Monthly compounding
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    Up to ₹1Cr
    7 Days to 10 Years
    4% - 7.30% Quarterly compounding
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    NRI - FD
    Up to ₹1Cr
    1 Year to 5 Years
    6.80% Quarterly compounding
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  • Fixed Deposit BYTES FROM OUR KITCHEN

    Fixed Deposit

    Know about fixed deposit

    A FD is a type of financial instrument offered by banks and it allows individuals to deposit sums of money for fixed periods of time, like 1 month, 6 months, 1 year, 5 years etc. In general, fixed deposit accounts offer a higher interest rates than savings accounts. Fixed deposits are regarded as safe investments and help people to grow their financial assets without exposing them to volatility and other risks associated with the financial market. Most of the banks offer fixed deposit accounts in India and the interest rates offered with these accounts depend on the tenure of deposit and other factors. The tenure offered with fixed deposits can range from 7 days to 10 years, whereas the interest rate offered can be as high as 9% per annum. Some of banks even offer tax saving fixed deposits that offer tax benefits to customers.

    5 Features of Fixed Deposit Account

    • The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their surplus funds (extra money).
    • The amount can be deposited only once. For further such deposits, separate accounts need to be opened.
    • The depositor is given a fixed deposit receipt, which depositor has to produce at the time of maturity. The deposit can be renewed for a further period.
    • As per the Traditional scheme, the interest on the FD account is credited to the Savings account specified by the depositor on a monthly basis or on a quarterly basis. For the Reinvestment scheme, the interest is compounded to the principal amount on a quarterly basis.
    • Tax is deducted at source, from the interest on Fixed Deposits, as applicable, as per the Income Tax Act, 1961.

    Types of Fixed Deposits

    There are various types of fixed deposit accounts that are available in India and investors can choose from the wide range of investment options based on personal and financial needs.

    Normal/Standard Fixed Deposits

    This is one of the most common fixed deposit accounts. It is also one of the most basic and uncomplicated forms of investment. A fixed sum of money is deposited for a certain pre-determined period of time and a certain interest rate is provided on the same.

    Features

    • Fixed tenure
    • Standard interest rates
    • Easy investment
    • Secure

    Special Fixed Deposits

    These types of fixed deposits come with certain special benefits or perks when compared to the ordinary fixed investment plan. They usually offer higher rates of interest. One can also generally take a loan on these types of fixed deposits.

    Features

    • Higher rate of interest
    • Special offers
    • Additional benefits

    Tax Saver Fixed Deposits

    These type of fixed deposit accounts are usually for a longer tenure that ranges between 3 to 5 years, or more. Therefore, they come with a lock-in period and one cannot break these deposits or withdraw them prematurely, unless in the event of death of the account holder. The main advantage of these deposits is that one can claim tax exemption under Section 80C of the Income Tax Act.

    Features

    • Cannot be broken until completion of tenure
    • The interest gained on these deposits are taxable

    Cumulative Fixed Deposits

    When it comes to cumulative fixed deposits, the interest earned on this will not be available or paid to the policyholder at regular intervals. Instead, interest will be paid only upon completion of the fixed deposit tenure along with the principal amount.

    Features

    • Interest paid with principal at the time of maturity
    • Not ideal for those without a regular income like pensioners etc.
    • Interest is compounded on a weekly, bi-weekly, monthly, quarterly, half-yearly or yearly basis
    • This leads to higher gains, making it a more profitable form of investment

    Non-Cumulative Fixed Deposits

    In the case of non-cumulative fixed deposit, the bank pays the account holder the interest earned on the principal amount at regular frequencies.

    Features

    • Good option for pensioners
    • Extra  income
    • Account holder can choose at what interval dividend should be paid
    • Usually one tends to earn lesser on the whole in this scheme when compared to cumulative fixed deposit scheme

    Flexi Fixed Deposits

    A flexi fixed deposit is a type of fixed deposit account where the savings account is linked with the term deposit.

    Features

    • Provides flexibility
    • Convenient
    • Best of both worlds

    What Are the Benefits of Fixed Deposit ?

    1. Assured returns: One of the main advantages of having a fixed deposit (FD) account is that it provides guaranteed returns on the investment. Hence, there is no risk involved in FDs when compared to other types of investments like mutual funds, debt funds, etc. Therefore, a fixed rate of interest will be paid on the investment amount.
    2. Very easy to open an FD account: It is a very easy to open an FD account and this can be done online in a matter of minutes. One can open FD accounts online in most of the major banks across the country with minimum documentation.
    3. Encourages Saving: Opening an FD encourages the habit of putting aside money for the rainy days of life. This inculcates the discipline of saving money for the long term.
    4. Higher rate of interest: FD accounts offer a higher interest rate when compared to savings accounts or other types of term deposit accounts like recurring deposits, etc. There are many banks, non-banking financial companies and other financial institutions that offer an attractive rate of interest.
    5. Flexibility: FD gives the account holder the flexibility to choose the amount of money he/she wants to invest and also decide on the tenure range. One can make investments for a minimum period of 7 days and maximum period of 10 years. There are some banks that also offer FDs for more than 10 years.
    6. Multiple accounts: One can hold multiple FD accounts at the same time without any hassle. For example, an individual can hold 2 or 3 FD accounts in the same banks. One can also hold FD accounts across different banks.
    7. Tax benefit: There are tax saver FDs that offer tax benefit under Section 80C of the Income Tax Act. One can invest up to Rs.1,50,000 and claim tax exemption for the same. However, most tax saver FDs have a lock-in period of 5 years.
    8. Helps beat risk: Opening an FD account is the best financial instrument to beat risks that arise from investing in other high-risk financial instruments such as stocks, mutual funds, etc. This helps manage financial risk on a long-term basis.
    9. Avail loan on FD: One can avail a loan in times of financial crisis on the FD amount. An individual can take up to 90% of the FD account amount as a loan. Please note that the account holder will still earn interest on the remaining amount left in the account.
    10. Minimal to no risk investment: FDs are minimal to no risk investments. One need not spend sleepless nights or worry about losing money in this type of investment.
    11. Highly liquid investments: FDs offer the customer the advantage of liquidity. In case there is a cash crunch or any other type of financial emergency, one can always close the FD or make an overdraft withdrawal from the same.
    12. Interest can be paid quarterly: One can supplement one's income and earn a fixed sum on interest on a monthly, quarterly or half-yearly basis. For instance, in cumulative FDs, the interest amount is credited to the account of the FD holder on a regular basis. This comes in handy for those who do not have a regular source of income like pensioners etc.

    FAQs of FD

    How does a fixed deposit account work?

    A fixed deposit allows an individual to keep a certain amount of money with a lender/bank for a certain duration of time for which he/she can earn a certain interest amount. The interest earned on an FD account is calculated based on the deposited amount and the term of the account. An FD account with a higher deposit amount will attract higher fd interest rates and likewise. The individual can choose to deposit a certain amount of money for a minimum of one month and a maximum of five years. As the name sounds, a fixed deposit account doesn’t provide the facility to withdraw the fund before the maturity, however, should the need arise, the account holder can liquidate the funds for a much lesser interest rate. The customers need to keep in mind that the interest earned on an FD account is subject to income tax.

    Can I break my fixed deposit before maturity?

    Yes, a fixed deposit account can be liquidated before maturity, however, the interest payable will be lesser than what is given at maturity of the account. The account holder will need to get in touch with the bank or use the net-banking service (subject to availability) to liquidate the fixed deposit account at any time during the term.

    What is meant by cumulative fixed deposit?

    A fixed deposit account is provided under either a cumulative or non-cumulative deposit scheme. Under a cumulative fixed deposit account, the account holder is entitled to the interest that is payable at the account maturity along with the principal amount. In cumulative deposits, the interest is accumulated with the deposit amount, which is eligible to earn compounding principle interest on monthly/quarterly/annually basis. Whether the account reaches the maturity or subject to premature withdrawal, the principal, as well as the accumulated interest amount, is paid to the customer at the end of the term.

    What is good, FD or RD?

    A FD is an investment plan where a lump sum is put aside for a fixed period of time to earn interest.

    A recurring deposit (RD) account is a type of investment plan where a certain sum of money is deposited every month or at set intervals of time for a fixed tenure. Interest is earned on the same.

    The interest earned on an FD will be much higher than that earned, for the same amount and interest rate, on an RD. Therefore, it always wise to choose an FD over an RD.

    Is fixed deposit tax free?

    Those investing in a tax saver fixed deposit can claim exemption under Section 80C of the Income Tax Act. The sum invested towards this will be deducted and will not be a part of the taxable income.

    However, one must note that the interest earned on such term deposits will be taxable based on the tax bracket of the individual.

    Is fixed deposit under 80C?

    Only in case of tax saver fixed deposits, exemption can be claimed under Section 80C of the Income Tax Act. For other types of fixed deposits, interest earned will be taxed and exemption cannot be claimed under this section.

    What is non-cumulative fixed deposit?

    A non-cumulative fixed deposit scheme is an investment plan where the interest is payable at regular intervals, which may be payable on a monthly, quarterly or half yearly basis, depending on the type of bank. This ensures that the investor is earning interest at regular frequencies on the fixed deposit. On the other hand, in a cumulative fixed deposit account, interest is payable only upon maturity along with the principal amount.

    Fixed Deposit Nomination Rules India

    • A nominee is a person who is chosen by the fixed deposit (FD) holder as the one who will have a legal right over the money in the FD account in case of demise of the FD holder
    • Even if there is any rival claim, the amount in the FD account must be paid to the nominee. The nominee will be entitled to get the FD money even if a claim is made by a legal heir
    • A nominee need not always be a family member or legal heir
    • As per rules, in most cases, banks will allow the GD account holder to nominate only 1 individual
    • One can change the nominee or cancel the nomination at any point of time by filling a simple application form
    • In case the individual holds many FD accounts at the same time, he/she can nominate different individuals for different accounts
    • In case the FD account holder has not made any nomination, the money will be transferred to the account of the legal heir after his/her demise
    • If the account holder has not nominated anyone while opening a fixed deposit but wants to do so at a later stage, it can be done
    • A nomination can be made by filling up the nomination form and submitting valid documents
    • For all joint FD accounts, the nomination process will be carried jointly by both the FD account holders.
    • All nominations can only be made in individual capacity and cannot be made in official capacity. This means that one cannot use any official designations for the purpose of nomination
    • If the nominee is a minor, the term deposit holder will have to mandatorily appoint another nominee who will receive the money on the behalf of the minor.
    • In most cases, one can only nominate individuals and not organizations. However, certain exceptions can be made to nominate trusts, etc.
    • A nominee will be the first person the bank will contact in case the FD account holder dies

    Nomination Procedure

    • Fill in the nomination form and sign it
    • Fill in details of the nominee
    • Confirm the percentage of nomination
    • The nominee will have to sign the nomination form  

    Renewals and Withdrawals of Fixed Deposits Renewal -

    • Rolling over of deposits for another term wherein tenor can differ.
    • Auto-renewal: Deposit-tenor remains unchanged but interest depends on rates prevailing at renewal.

    Withdrawal –

    • Encashment of deposits at maturity
    • Encashment prior to maturity i.e. premature withdrawal subject to penalty Partial withdrawals (prematurely)
    • Amounts up to Rs.20,000 can be withdrawn in cash. Amounts above Rs.20,000 have to be transferred to the customers savings account or current account or paid-out through a crossed cheque.
    • Sweep-In facility / Flexi-Deposits: Withdrawals allowed on interest accrued on an FD. The balance is then held as a new deposit.
    • Tax-saving deposits: No withdrawals allowed for 5 years minimum
    • Either of the two are executed based on the account-holder’s instructions without which the deposit will be automatically renewed.
    • Fixed Deposit Receipt has to be surrendered upon renewal or withdrawal.

    Premature Withdrawal of Fixed Deposit

    Premature withdrawal or Breaking a fixed deposit means withdrawing the money before the maturity expires. This may be necessary if you urgently require the funds or if there are better investment opportunities elsewhere. Many people want to close their old Fixed Deposit account before maturity and open a new account when they see the current interest rates on fixed deposits in the market much higher than rate of interest at which they have opened FD sometime back.

    Most of the banks charge premature withdrawal penalty in the form of a 0. 5-1% lower interest on customers looking to close their Fixed Deposit

    In the event of the FD being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank, with premature closure penalty.

    Partial Withdrawal of Fixed Deposit

    The Bank on request from the depositor, will allow withdrawal of term deposit before completion of the period of the deposit as per terms agreed upon at the time of placing the deposit. For such premature withdrawals and partial withdrawals, the Bank will levy a penalty of 1%, on the applicable rate. Partial withdrawal is permitted in units of Rs 1,000. The balance amount earns the original rate of interest.

    Fixed Deposits for NRI

    Non-Resident Ordinary (NRO) Rupee Accounts are maintained by non-resident Indians (NRI) in Indian Rupees, to keep funds that belonged to them before they turned NRI. These accounts can also be used to account for fresh earnings in Indian Rupees even after the individual has turned an NRI, from such sources as house rent, dividend and interests, salary etc. The interest earned from such accounts is taxable as per the Indian income tax regulations. Currently, Indian banks offer an interest rate from 8-10% on fixed accounts that fulfil the NRO parameters.

    Alternatively, a Non-Resident External (NRE) Rupee Accounts are maintained by non-resident Indians (NRI) in Indian Rupees and are meant for foreign exchange that is earned in their country of residence and then transferred to India. The interest earned from such accounts is tax free and the funds can be moved around to other accounts without any restrictions. Currently, Indian banks offer an interest rate from 7-10% on fixed accounts that fulfil the NRE parameters.

    Fixed Deposit Tips

    4 golden rules of investing

    Many first-time investors make the mistake of investing in products that they do not know much about. We can help you there. Here are a few rules of investing. Waiting to get started?

    Understand Investments

    Don’t put your hard-earned money into unknown avenues. Learn all you can about an investment product before you invest. Identify your financial needs and choose investments that suit your goals.

    Do Not Time the Markets

    Follow only one mantra while investing. Buy low and sell high. Avoid trying to time the markets. Invest for the long term to beat market volatility.

    Be Realistic In Your Expectations

    Just because some funds promise high returns, don’t expect them to make you rich overnight. Review your investments for profits over a long term.

    Track Your InvestmentsRegularly

    Remember to keep a watch on the performance of your investments. Rebalance your portfolio at regular intervals based on market trends.

    Successful investing is all about making the right decisions at the right time. Are you ready to make your money work for you?

    Fixed Deposit Advantages and Disadvantages

    Fixed deposit accounts provide a stable platform for investors to earn a guaranteed return on investment on their deposits with low or no market risks. A fixed deposit or term deposit account comes with a tenure which can easily be opened and liquidated if needed (subject to charges and terms of the account). There are various types of FD accounts that provide tax benefits to the investors. An FD account has its own advantages and disadvantages which are outlined below to help you make an effective investment decision.

    4 Advantages of Fixed Deposit

    FDs are popular for offering a safe avenue for investment which can provide tax deduction under Section 80C of the Income Tax Act, 1961. Over the years, people have been investing in FD accounts to avoid any kind of market risk while being certain about a earning a decent interest. Moreover, the other avenues of investment may provide a higher return provided the investor is willing to accept the risk factors. The following factors are few of the distinct advantages of investing in an FD accounts:

    • Risk factors - An FD account provide relief to the investor by facilitating a safe platform for investment. The other investment avenues such as mutual funds, stocks, debt funds, unit linked insurance plans, etc. carry market risk based on the type of the investment fund. Considering the fact that the investment is safe with an FD account, the majority of investor choose FD accounts over other investment options. Moreover, RBI’s regulation for taking up an insurance on the FD account enables the investor’s account to be insured for up to Rs.1 lakh.
    • Loan options - In the event of an emergency situation, the investor can choose to avail a loan on the FD account for a lower interest rate. The interest rates for such loans are typically lower than the market rate for other types of loans. Hence, an FD account can come handy when the investor needs to take a loan. Most FD accounts offer up to 90% of the FD value as the loan amount.
    • Flexible interest payouts - Based on the investor's requirements and type of the FD account, the interest is paid out at regular or periodical intervals. The investor can choose to receive the interest payouts on either annual or monthly basis along with an option to withdraw the interest at maturity.
    • A higher interest rate for senior citizens - Most FD accounts offer a higher rate of interest for senior citizens which makes it popular even among the retired investors.

    3 Disadvantages of Fixed Deposit Account

    Though an FD account offers safety and decent income through interest, it has its own drawbacks. Nowadays, most investors are finding different avenues to increase the earning potential. Additionally, other avenues of investment disclose the level of risk anticipation based on the investor's financial goals and other needs. There are certain types of investment options that allow the investors to switch their investment fund during the term of the scheme for a nominal or no charges at all. Moreover, certain accounts set a threshold for market risk exposure which helps in securing a certain amount of fund before the risk factors impact the accounts severely. In order to decide whether to invest in an FD account or not, an investor must consider the following disadvantages of an FD account:

    • Earning potentials - It’s a known factor that an FD account is the not the best avenue of investment for maximum return. Though it offers safety, it lacks the higher returns what other investment options are capable of offering. There are certain banks and non-banking financial companies (NBFCs) who offer a higher rate of interest on the FD accounts, however, the earning potential is still lower than most investment options.
    • Liquidity factor - An FD account comes with a fixed tenure and the investor is expected to hold the account until maturity to be eligible for the complete earning, however, if he/she decides to liquidate the account before maturity, only a partial interest earning is provided. Moreover, the liquidation fee also contributes to the low earning of a premature FD account. Depending on the type of FD account and the financial institution, the investor may choose to wait for a specific period within the fixed tenure to avoid heavy premature withdrawal charges. There are certain financial institutions that offer a decent interest earning if the investor decides to wait for at least a year or two before liquidating the account before maturity.
    • Tax benefits - Unfortunately, tax benefits are applicable for certain types of FD accounts only (known as tax-saver FDs). Moreover, in case of a joint-account, only the first account holder is eligible for tax benefits under the Section 80C of the Income Tax Act, 1961.

    While making an investment decision for an FD account, the investor must assess his/her financial situation in order to determine his/her financial goals. An FD account has been the popular choice of investment for most conservative investors since it eliminates the market risk and ensures a guaranteed return irrespective of market condition, however, there are various other investment options that offer a higher return based on the risk appetite of the investors. Before making an investment decision, investors are advised to compare various types of FDs and other investment option in order to make a better decision. The tax benefits are based on the current tax rules which are subject to change.

    Also Know About


    • Your Guide to Fixed Deposits

      Planning to invest some money in a Fixed Deposit? Here’s all you need to know. A Fixed Deposit is a savings scheme in which you deposit a principal amount for a fixed tenure. On maturity, you get the principal amount including the interest earned. Simple! What’s more? Fixed Deposits give you guaranteed returns on maturity and offer higher interest rates in comparison to a regular savings account. You can also apply for a loan against your Fixed Deposit and get up to 90% of the amount. You can deposit any amount of money in a Fixed Deposit and also choose the tenure. This could range from 7 days to 10 years. Senior citizens can get higher interest rates on Fixed Deposits which vary from bank to bank. You’ve just learnt everything that is important about Fixed Deposits. Ready to start investing?

      Stay up to date! Daily finance news at your fingertips. Explore Fixed Deposit on Mobile App

      22nd August, 2016

    News About Fixed Deposit

    • FD Investments Preferred More Than MF and Equities

      According a Sebi Survey, over 95% families in India prefer fixed deposits over equities and mutual funds. The survey revealed that only 10% households invest in risk instruments. Life insurance ranks second and precious metals rank third in the list of most preferred investment instruments in the country. The fourth and fifth place are taken by post-office savings and real estate followed by Mutual Funds (MF) and stocks. As per the survey, only 1.4% people in rural areas are aware of equities and MFs.

      12th April 2017

    • FD Deposits of a high amount used for development work in Mumbai :BMC

      The BMC has said that all fixed deposits amounting to a high amount to the tune of Rs.61,510 crore kept in numerous banks will be used only for city development projects. Corporators from various parties had said that the money should not be used for any purpose other than for Mumbaikars instead of burdening them with hikes. Sanjay Mukherjee, the Additional Municipal Commissioner said that these funds would be used purely for development purposes.

      According to civic officials, BMC makes provision of large scale for capital works in the budget and takes a year or more for these works to be completed. Delay in procuring no-objection certificates, permissions from departments such as railway, forest and environment occurs frequently.

      6th April 2017

    • Oxxy to open FD for each girl child born in India

      After the brilliant performance of Indian female athletes in the Rio Olympics, Oxxy, one of India’s largest healthcare networks, has announced that it will make a fixed deposit of Rs.11,000 for each girl child born in the country. The company said that there will be no contribution taken from the parents and the allocation of the funds will be handled by Oxxy. The fixed deposit can be withdrawn by the girl when she attains the age of 18 years. Everyday approximately 50,000 children are born in India and Oxxy is expecting approximately 5,000 registrations per day. Oxxy’s Girl Development Program is available to every expecting mother and has helped reduce the infant mortality rate by educating expectant mothers on the various tests they need to undergo in accordance with global standards.

      9th March 2017

    • Jan Dhan Deposit withdrawal reaches Rs.5,582 crores in one month after note ban

      A net withdrawal of Rs.5,582.83 crore has been observed in Jan Dhan accounts ever since 7th of December which was the day deposits in all these accounts increased to an all-time high after Prime Minister Narendra Modi’s decision to ban cash notes worth Rs.500 and Rs.1,000 in order to curb corruption, a move which came to be known as demonetization.

      Total deposits had increased to a high of Rs.74,610 crore on the 7th of December and after that started reducing gradually to close at Rs.69,027.17 crore on the 11th of January, according to the latest data from the Finance Ministry. During the period between 7 December to 11 January, the total deposit had reduced by rs.5,582.83 crore. As of now, there are around 26.68 crore Jan Dhan accounts. The upper withdrawal limit per month for a Jan Dhan account has been fixed at Rs.10,000 from the 30th of November to check for misuse of these accounts. The upper limit for all deposits in a Jan Dhan account is Rs.50,000. On November 9th, the day after demonetization was announced, there were 25.5 crore accounts which had a deposit of 45,636.61 crore. Total deposits in these accounts increased by around Rs.28,973 crore in around a month.Mr.Singh also said that this was just a soft launch and that the firm is planning a mega launch to announce its arrival sometime in April.

      9th February 2017

    • Utkarsh launches Small Finance Bank

      Utkarsh Micro Finance, backed by Commonwealth Development Corporation (CDC) has begun a new chapter by foraying into the banking sector.

      The company which began operations on the 23rd is looking to take the market over by storm by providing higher deposit rates compared to major banks.

      At present, the bank is looking to reduce the 1% processing fee levied on new loan borrowers and is also considering reducing the lending rates in the near future. Currently, the lending rates range between 15% - 25% annually.

      Managing Director of the bank, Govind Singh, spoke to the media and said that the company has successfully completed all formalities and has launched five full-fledged branches in key areas.

      He also said that the company is the first banking-related entity to be launched since demonetisation and that all this was possible because CDC pumped in Rs.150 crores in Tier-II capital about two weeks ago.

      Mr.Singh also said that this was just a soft launch and that the firm is planning a mega launch to announce its arrival sometime in April.

      7th February 2017

    • From Yes Bank to SBI, lenders slash deposit rates to cut the cost of funds

      Last fortnight, the non-food credit in banking system was 9.3%. However, on September 30 when the fortnight ended, the non-food credit in banking system went up to 10.6%. When the fortnight ended, as per the Reserve Bank of India, the review for non-food credit stood at Rs.74.35 lakh crore. There was also some growth with bank deposits which was 11.3% year on year. The previous fortnight, the year on year rate stood at 9.9% which amounted to a total sum of Rs.101.43 lakh crore. This was for the first time that the banking deposits surpassed Rs.100 lakh crore milestone.

      There has been very less growth in the section of loan sanctions. So the 10.6% credit growth is basically a result of the demands from retail segment. The management of different banks have agreed on the same and stated that this would remain their focus area now. The borrowing have been moved by different companies to corporate bond market. This has happened due to the low rates of interest. The lowest MCLR for one year is 9.05% at present. For corporate bonds that come with AAA rating, the benchmark rate set by FIMMDA is 7.6%.

      18th October 2016

    • SEBI Bars Banks from using FDRs as Collateral

      According to SEBI, banks are not allowed to use their own fixed deposits receipts as collateral as clearing or trading stock exchange members, whether they function directly or through associates. This move was made as step towards strengthening SEBI’s risk management mechanism. Clearing corporations received a circular directing them to stop accepting FDRs from banks. For those members who already deposited their FDRs or their FDRS from associate banks, they would be required to replace the collateral with other eligible security within the next 6 months. IOSCO, the international securities regulator body, has its own global benchmarks set for collaterals. The need for Indian markets to align the risk management practices along the lines of global benchmarks has emerged. In light of this, SEBI has taken the step to bar FDRs being used as collateral.

      21st July 2016

    • Positive Real Rates for Depositors

      Before Raghuram Rajan took over as the Governor of the Reserve Bank of India, depositors were facing negative real rates when it came to their savings. People turned to more lucrative investments such as gold, land and other non-financial assets. An important objective for Rajan was to raise the interest for savers with a decent positive real rate. Since January 2014, the rates have been rising as inflation started to fall. In the past few months, the real term deposit rates have been declining. However, the rates have stayed positive making deposits more appealing. For those interested in depositing their money in fixed deposit schemes, the returns will be higher than what they were a few years back.

      21st June 2016

    • Stocks Did in Three Years What KVP and FD Can Do in Eight Years

      Money invested in stocks increase in value much faster than money invested in KVP or FD. It is important to not invest everything in just one investment option but to diversify. Diversification reduces risks that are specific to stocks and provides better returns as well.

      Companies that provide visible growth in earnings are generally chased by companies resulting in an increase in their valuation. However, there are times when investors get trapped while chasing such companies. Although stocks look expensive upfront, they must be evaluated based on their growth, sustainability and visibility of earnings.

      20th June 2016

    • Growth in Bank Deposits Sinks to 5 Decade Low for FY16

      The financial year 2015-16 saw bank deposits grow at 9.72%, a 5 decade low for the segment on a year-on-year basis.

      The low bank deposit rate has caused alarm, given that the government has recently lowered small savings interest rates which has brought them equivalent to bank deposit rates.

      The low rate has been blamed on high interest rates, resulting in depositors withdrawing and spending more.

      Scheduled commercial banks have seen barely 9.9% growth with regard to their deposits, caused due to low inflation and a high real interest rate.

      Credit increased by 11.28% for the same time period, with advances for the period being Rs. 73, 026 billion. Due to the problem of capital shortage and a rise in the number of non-performing assets, the Finance Minister announced a capital infusion of Rs. 25, 00 over the 2016-17 fiscal year.

      28th April 2016

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