Some important topics on Fixed Deposit are elaborated below with reference links.
Fixed Deposits or FDs as they are commonly known as are financial instruments that are quite popular in the Indian financial scenario. The traditional Indian customer is more savings oriented than investment inclined. This means that Indians avail a lot of savings and deposit products as compared to investment tools like equity-linked schemes. When we talk about fixed deposits, there are a few topics that become extremely imperative to the buying and retaining of fixed deposit instruments. Reading up on fixed deposit instruments offered by various banks and financial institutions gives one valuable insights into the functioning of this financial product.
Some of the important articles on FDs include knowing about the rate cuts involved with deposit instruments. Rate cuts are central government and RBI driven decisions that affect all deposit instruments. Another thing to read up is the best FD scheme depending upon your financial capacity and preferred tenure and also financial goal. Financial goals such as tax saving require longer tenures of deposit. Another angle from which FD schemes can be evaluated is that of ratings by various credit agencies like CRISIL etc. Interest earned on FD can be both cumulative and non-cumulative, knowing the difference between the two can pave way for a customer to zero down on the exact Fixed Deposit scheme that he or she wants to avail.
Also, other many facets of information on fixed deposit instruments is key in enabling customers make the most informed and smartest decision with respect to their savings instrument. Difference between fixed deposit schemes offered by banks and those offered by non-banking financial corporations is another facet to dwell upon. Similarly, whether to choose a private bank of a public sector bank for placings one’s FD is another decision that a customer needs to make.
Fixed Deposits are an extremely popular financial instrument in a traditional financial market like India. Among these too, the most sought-after are the tax-saver fixed deposit instruments since these offer tax exemption to the deposit holder. Income tax eats into a major chunk of any earning individual. To save up on tax investment into various savings and investment tools is required. Tax-saver FDs help individuals not just save on income tax but also save a substantial corpus over a fixed period of time.
Tax-saver fixed deposit schemes are offered by both private and public sector banks. While public sector banks are considered more reliable in terms of returns, private sector banks offer exemplary ease of account opening and other transactional functions.
Rates for tax saving FDs are different for different banks. These rates do not vary much but are close to an average rate of interest prevalent for a particular FD product in the market. Tax saver FDs come for a tenure of 5 years or above. The maximum amount that can be invested and hence exempted from taxation is Rs.1.5 lakh per annum. Most banks allow the minimum investment amount of Rs.500 towards tax saver fixed deposit schemes.
One of the most significant points about tax saver FDs is that premature withdrawal is not allowed in case tax benefit is to be enjoyed. Also, one FD availed in a particular financial year can serve as tax saving instrument for that particular year. In case a tax saver FD is availed jointly, only the primary deposit holder is eligible for tax exemption and not the secondary subscriber. Interest received on tax saver fixed deposit schemes is subject to tax deduction unlike the government run small savings schemes like PPF. Tax deduction available via fixed deposit schemes is under section 80C of the Income Tax Act.
Fixed Deposits are one of the many financial instruments available in the financial markets today. While fixed deposits find great favor among the Indian customer there is a substantial percentage of customers who prefer to have a diversified portfolio. A huge number of people are also shifting towards a purely aggressive portfolio in order to earn enormous returns.
Comparing FD with other savings and investment instruments will give a great peak into the small and big features of fixed deposits. FDs are an easy and almost risk-free instruments when availed from a public sector bank. These banks have the minimum chance of going bankrupt and as such FDs with such banks are a safe haven for your hard earned money. However, when FDs are compared with small savings government instruments like PPF and Sukanya Samriddhi Scheme, FDs prove to offer lower returns since the interest earned on these is taxable whereas small savings instruments do not tax the interest portion.
Similarly, when compared with equity-oriented investment tools, FDs prove to offer lower returns as well as lower risk. The rate of interest offered by FDs is substantially less than that offered by mutual funds. However, mutual funds are subject to market risks and as such are far less dependable than a standard fixed deposit scheme.
Buying a fixed deposit scheme versus getting an insurance scheme is purely subject to the financial goal that you are trying to achieve. For example, if your end goal is to avail life cover then of course an insurance scheme will be your best bet. However, if you are investing solely for the sake of saving your hard earned money then obtaining a fixed deposit scheme could be a good idea.
Like fixed deposits, there is also an instrument called recurring deposit. The rates and nature of deposit remains pretty much the same apart from the fact that a recurring deposit is aimed at customers who wish to save and deposit a small amount every month unlike FDs which demand a lump-sum deposit.
The Indian market is flooded with fixed deposit schemes from various public sector banks, private sector banks as well as non-banking financial corporations. These fixed deposit schemes vary in the offered rate of interest and tenure. In order to cut through the prevailing competition and attract specific types of customers, banks roll out special FD schemes. Many such schemes are active at any given point of time. The most luring feature of these special FD schemes is that they offer a certain higher rate of interest to customers for a specific period of time. The most prominent strategy employed by banks is to play around with the rate of interest offered to customers.
Many banks also offer higher rates of interest for FD schemes that come with a particular tenure. For example, Punjab National Bank which is a government sector bank has a fixed deposit scheme that offers loans and overdrafts against the scheme. Similarly, there are schemes that are aimed only towards women customers. There are also special flexi fixed deposit schemes that offer not just flexibility in terms of the amount deposited but also in terms of withdrawals. Bank of Baroda, Axis Bank and Allahabad Bank are some of the banks that run this scheme. Special rates of interest are also offered to senior citizens. Generally, all banks, public and private both, offer 0.5 per cent more to their senior citizen customers on their fixed deposit schemes.
Many banks also run special FD schemes focused at children or girl child. These accounts are operated by the parents or guardian of a child until the child attains maturity. Examples of such schemes are PNB Balika Shiksha Scheme which is a scheme aimed at education of girl child, Allahabad Bank Shishu Mangal Scheme, HDFC Children’s deposit scheme etc.
A Fixed Deposit is a popular investment cum savings option in India, with it forming a core part in most of our investment portfolios. Given the multiple benefits of Fixed Deposits, it is easy for us to be carried away with what we hear or see our friends/relatives do, but one should remember that the decision to opt for a fixed deposit should be based on our individual needs. One key factor which plays a major role in differentiating fixed deposits is the tenure and the interest rate offered for a particular tenure. Banks typically offer a higher interest rate for fixed deposits with a longer tenure, but doing a little research can help us get a good interest on our investment even for a short or medium tenure.
Most individuals choose a tenure without considering other factors, which can depreciate the quality of their investment or could see the investment falling short of their expectations. The age of an individual, his/her financial plans for the future, current financial liabilities and inflationary trends are some points which could have an impact on the outcome of a fixed deposit. Most Indian banks offer a tenure ranging between a few weeks to 10 years, with the interest being different for each period. Current trends show that FDs with a long tenure, 5 years and above command higher interest, whereas those with a tenure of 1 year are extremely popular due to the fact that the interest isn’t very low.
With interest ranging between 6% per annum to 9% per annum based on tenure, the difference between a smart investment and an average investment boils down to the tenure. Increased competition has ensured that banks are out on a limb trying to attract new customers, which means that you could stand to get a great deal on your investment, provided you do some research before investment.
Fixed Deposits are a popular option in our country, with millions of us opting for it. Given the number of options available in the market, the popularity of fixed deposits is an indication of the benefits offered by them. Not only are fixed deposits easy to open and maintain, they ensure that the money invested in them grows over time, helping depositors make a decent profit on their investment. With banks trying to woo new customers, the interest rates on fixed deposits have become more competitive, which means that the biggest winner in the fixed deposit race is YOU, the customer.
With the habit of saving inculcated in Indians from a young age, a fixed deposit is perhaps the best savings instrument available, helping us save money for a rainy day and encourage us to save more. Not only are accountholders assured of guaranteed returns designed to beat rising inflation, the amount one invests in a fixed deposit is available for use during emergencies, albeit at a small fine. Flexibility, ease of use and accessibility have helped remove the previous notion of fixed deposits being rigid and user unfriendly.
One key point which often plays on our minds while choosing a Fixed Deposit is the division of our resources, and splitting an investment amount into different FDs not only helps us reduce our tax liability, but also enables us to invest in a manner wherein we have earned interest and have the option to withdraw amounts without the fines pinching us. A wide variety of options when it comes to tenure can help us plan our finances down to the last detail, keeping us focussed on the larger picture. Investing in a good fixed deposit is an extremely smart and safe option, and the trust of millions of people on FDs highlights why they have become an integral part of our financial portfolio.
The human mind is such that it looks to get the best out of each situation, modifying decisions to suit a certain requirement. One key thought which is present in almost all our minds is related to money, with a majority of us looking for means to enhance our finances. Fixed Deposits are one such option available to us, but we often find the interest rates offered by banks to be on the lower side, which is where one could think about investing in a Company/Corporate Fixed Deposit. A Company Fixed Deposit is similar to a normal FD offered by banks, the only major difference being the rate of interest offered and the risk profile.
A number of companies offer fixed deposits, with the interest ranging anywhere between 8 and 11% per annum, which is considerably higher than interest rates offered by banks. This higher return comes with an added risk factor, since company performance is typically related to markets and a poor performance by the company could put the returns at risk. Individuals who are keen to invest in company FDs despite the risk factors needn’t worry though, for a few organisations rate the FDs offered by companies, ensuring that investors have a yardstick to gauge their investment.
Most Company Fixed Deposits have a tenure ranging between 1 to 10 years, providing the same options as a Bank FD when it comes to tenure. Simple eligibility requirement combined with ease of opening a Company FD have attracted a number of individuals towards them and with just rare instances of problems witnessed, these can be a good option for individuals with an appetite for more, provided one does sufficient research before investing his/her hard earned money.
The world is a global village today, with physical boundaries no longer restricting us from exploring the world. Increased opportunities and the hunger to achieve a better livelihood have seen a large number of Indians moving overseas, with estimates showing that over 1 crore NRIs have left Indian shores to try their luck abroad. A large majority of Non-Resident Indians move to other countries to earn a living, hoping to make sufficient money before returning home. This has given banks an opportunity to provide products that cater to their unique needs, with a number of big names offering fixed deposits to NRIs, helping them stay financially connected to their loved ones back home.
Customised banking solutions combined with ease of access have seen a number of NRIs opening either NRE (Non-Resident External) accounts, NRO (Non-Resident Ordinary) accounts or FCNR (Foreign Currency Non-Resident) accounts in different banks across the countries. These options ensure that NRIs can continue with their way of life without having to worry about the financial situation back home, helping them provide for family members in India. Opening an NRI account is simple and fast, offering a host of incentives and benefits to NRIs, making it an attractive option and not just a basic necessity.
Apart from establishing a bridge to connect with conditions in India, a NRI Fixed Deposit also offers attractive interest rates, thereby making each deposit a good investment option, ensuring that the money beats inflation and offers decent returns in the future. Flexible tenures are another added incentive, helping an NRI plan his/her financial resources to meet future requirements. Given the appetite of NRIs to make it big in the world, choosing a good FD can help them achieve financial stability without taking additional risks.
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