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When you put your money to work in fixed deposits, you basically lock the amount for a fixed period of time. You can earn interest on the principal sum throughout the tenure on a cumulative basis. The interest earned gets added to the principal amount after every specific interval.
Since the tenures are flexible, you have the option to manage multiple FD accounts spread across different tenures. That way, you will be able to earn more on your investments. Senior citizens are eligible for additional rates, usually 0.25% to 0.65% more than the existing rate.
Other than this, even NRIs (Non-resident Indians) can open FD accounts in India in the form of NRE (Non-resident External) and NRO (Non-resident Ordinary) FDs.
You can open a term deposit account with a bank where you already have a savings account. There are banks that let you open an FD account even if you don’t have a savings account with that bank. However, with such banks, you have to go through a KYC process where you have to present relevant documents, including ID proof, address proof, passport size photographs, among others.
Fixed Deposit by Other Banks
The following entities are eligible to open an FD account in India:
Get Fixed Deposits interest rates by Top Banks Explore FD rates
The documents required for opening an FD account are as given below:
You can obtain the application form to open a fixed deposit by:
For Non-resident Indians, there are two types of accounts they can open with Indian banks—Non-resident External account (NRE) and Non-resident Ordinary account (NRO).
NRE FDs are beneficial for those earning in foreign currency and who would like to get the amount converted to the value of Indian currency. Some of the major highlights for an NRE FD account is that the interest earned is tax-free and both the principal and the interest amount are completely repatriable. The only pitfall is that the money deposited can get affected due to currency rate fluctuations.
Unlike NRE FDs, the interest earned through NRO FDs is taxable based on the income tax category. Wealth and gift tax are also applicable. However, reduced tax benefit can also be availed under the Double Taxation Avoidance Agreement (DTAA).
Also, only the interest earned can be completely repatriated, but the principal amount can be repatriated within a certain bracket or set limit. However, the plus point is that in case of NRO fixed deposits, there are no exchange rate fluctuation risks. You can deposit money in foreign or Indian currency in case of NRO accounts. So, if you are staying abroad and your total income also includes earnings from India, NRO FDs can be an effective gateway to manage your funds within India.
Here are the factors to look into when choosing a fixed deposit:
Fixed deposits have several advantages, some of which are:
Fixed deposits offer both protection of a fixed amount as well as a regular flow of income. This makes it is ideal for those who have a lump-sum amount that they do not need to use for some time. It is also the right financial product for those who are risk averse as the returns are not subject to market risks but offer a fixed rate of interest throughout.
You can open an FD in two ways: online and offline.
Online: To open an FD account online, it would be easiest to do so with the bank where you already have an account. All you have to do is use the net banking facility, fill up the online form for opening an FD, and submit it. In such cases, KYC will not be required as your bank will already have the details. You can transfer the funds through your account using the internet banking facility.
Offline: Visit the nearest branch of your bank and fill up the application form for opening an FD account. Submit it to the concerned official with the required documents. Deposit the required amount and you will receive the FD receipt.
There are many benefits to Tax Saving Fixed Deposits. These are as given below:
To find out how much interest your fixed deposit will yield for a specific tenure, you can use a free online compound interest calculator. Based on the rate of interest, the FD Calculator will determine how much your deposit will yield at maturity depending on the principal amount. This is calculated based on several factors including the interest compounding frequency which would depend on the bank. It can be on a monthly, quarterly, half-yearly, or annual basis.
The Reserve Bank of India lends to banks at interest rates that can vary based on the prevailing economic conditions. When interest rates are revised by the RBI, banks too may change the interest rates offered on their fixed deposits. This can increase or decrease based on the repo rate (the rate of interest at which the RBI lends to banks).
The minimum amount required to open a fixed deposit can range from Rs.1,000 (in State Bank of India) to Rs.5,000 (in Axis Bank).
Yes, you can withdraw your FD at any point in time unless the bank has a lock-in period.
There’s no upper cap for fixed deposits. However, you can check with your lender to see if there are any set limits.
The fixed deposit can be doubled depending on the rate of interest that is being offered.
Yes, it is risk free and provides returns that are guaranteed.
This will depend on the rate of interest being offered and if it remains consistent throughout the five years.
Your FD interest can be compounded monthly, quarterly, half-yearly or annually as per your choice. However, frequent compounding can reduce the rates.
A 5-year FD cannot be broken before its tenure of 5 years is completed.
Your FD tenure can range from 7 days to 10 years depending on the term you choose.
Yes, fixed deposits are safe because the returns are not affected by fluctuations in the stock markets. Also, the Reserve Bank of India provides insurance for up to Rs.1 lakh of your fixed deposit in the event of a banking crisis.
No, it’s not tax free. However, you can get tax exemptions if you opt for tax-saving fixed deposits. Under such FDs, you can claim a deduction of up to Rs.1.5 lakh under section 80C of the Indian Income Tax Act, 1961.
In a fixed deposit, your money is locked away for a fixed period of time in a bank. The principal amount that is deposited earns you interest on a cumulative basis.
If you break your fixed deposit before the maturity period is over, you will get a lower rate of interest and a penalty will be deducted from the amount before it is given back to you.
While opening an FD, you can mention that after maturity the amount can be transferred to your savings account. Or you can mention in the form that the amount to be renewed after maturity. If you choose the second option, after maturity, the amount will be reinvested as fixed deposit with the same tenure and rates as the previous one. If nothing is notified in the form, the concerned lender will notify you. In case you don’t respond within 14 days after FD maturity, your account will be renewed automatically.
The State Bank of India has alerted customers and fixed deposit account holders about new frauds taking place under SBI fixed deposits. The bank had previously seen reports of cybercriminals creating fixed deposits in customer accounts to carry out frauds and siphon money.
The bank alerted its customers via social media and asked them to control access to the account and not share any personal information with others including passwords, OTPs, CVV or card number. SBI does not ask customers for this information via phone, SMS or email.
Fraudsters have been creating an FD account by acquiring net banking details and transferring amounts and asking for OTP posing as an SBI official. They are then said to transfer the entire FD amount to their account after tricking the customers to provide the OTP for the transactions.
14 April 2021
Fixed deposit account holders who have vaccinated themselves against COVID-19 will be eligible for a higher interest rate on their FD. The Central Bank of India is offering a higher interest rate by 25 bps or 0.25% for the depositors who have been vaccinated.
The public sector bank has launched a special fixed deposit scheme called Immune India Deposit Scheme for a tenure of 1,111 days and will be offering an additional 0.25% for the depositors who have received at least one vaccine shot against COVID-19.
The Central Bank of India has launched the scheme as a social commitment for a healthier society and has requested citizens of India to get vaccinated.
14 April 2021
In a bid to boost COVID – 19 vaccination drive in the country, Central Bank of India has launched a special deposit scheme for those who get vaccinated. The scheme called ‘Immune India Deposit Scheme’ matures in 1,111 days with the interest rate being 25 basis points above the applicable rate. Senior citizens will be eligible for additional interest as applicable, the lender added. The scheme is valid for a limited period of time.
14 April 2021
The Paytm Payments Bank Limited (PPBL) had announced its partnership with Suryoday Small Finance Bank to offer fixed deposit facilities for its account holders. PPBL had already been offering fixed deposits to its customers after its collaboration with IndusInd Bank with a minimum investment of only Rs.100.
According to the company, PPBL has become the first payments bank in India to launch a multi-partner fixed deposit service. In this way, customers can select which bank they wish to open an FD account from.
Customers will also be able to compare between the various features of the FD account from different banks with different parameters such as minimum investment, tenure, interest rate, etc.
20 January 2021
Axis Bank has announced a new fixed deposit feature where there will be no penalty for premature withdrawal of fixed deposits. This is for new retail term deposit bookings that have been opened on or after 15 December 2020. It is for deposits with a tenure of 2 years or more and which are prematurely withdrawn after 15 months of opening the account. There is no penalty on premature withdrawal for the first time if the amount withdrawn is up to 25% of the principal amount in the fixed deposit account.
12 January 2021
A Virtual video booth facility is being offered by DCB Bank to allow contactless onboarding of new customers. Therefore, resident citizens can open a new Fixed Deposit (FD) account via video-KYC. Individuals will not need to visit the bank branch to open an FD account. The new facility will be available on most iOS and Android smartphones. In order to determine the applicant’s location, the app uses geo-tagging features. Even though most banks offer the online facility, there are limited options and only a bank account can be opened without providing any paperwork. As individuals prefer to complete transactions without visiting the bank, providing this facility will be appealing. The new facility is available for DCB Zippi Online Fixed Deposit and is completely automated. The new facility is completely a Fixed Deposit account, and individuals need not open a savings account. The entire process is simple, free, and the account can be opened in 2-3 minutes. You can opt for the facility on any working day.
7 August 2020
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