FD Trends in India 2025
In India, many people prefer fixed deposit as a form of investment. In a fixed deposit, an individual might invest certain amount and may get considerable amount in returns. A lot of Indian banks offer fixed deposit for a tenure of 15 days to years.
Historical Analysis of Fixed Deposit in India
Before 1992, Indians banks were required to give up to 8% of interest rates for any tenure of a fixed deposit scheme. However, in 1992 interest rates on fixed deposits were deregulated, and as a result, their returns were no longer correlated with their maturity. Any deposit placed for more than 46 days was eligible for interest payments of up to 13% from banks.
Later in 1997, Reserve Bank of India (RBI) completely changed the rules for fixed deposits in India. After this, fixed deposit interest rates were no longer correlated with bank rates. Nowadays, Banks are permitted to set their own fixed deposit interest rates and are not obligated to follow what other institutions are providing for the same maturity period.
Factors Influencing Fixed Deposit Rates in India
Below are a few factors that might influence fixed deposit rates in India -
- Invested amount - The amount you invested surely affects the rates of your fixed deposit in India. If you have invested Rs.500 then you will get a different interest rate when compared to an investment of Rs.10,000.
- Tenure - The tenure selected when the investment was started determines how much the interest on fixed deposits varies. Numerous lenders provide long-term fixed-rate mortgages at hefty interest rates.
- Age of the Investor - Usually, the age of the investor determines the type of interest rate they will get. Many Indian banks offer extra interest rates to senior citizens.
- Economic situation - The interest rates that apply to fixed deposits are heavily influenced by the country's current economic situation as well as its monetary and fiscal policies.
Tax Benefits of Fixed Deposits
Fixed deposits that qualify for a tax deduction under Section 80C of the Indian Income Tax, 1961 are known as tax saving FDs. The benefits of tax deduction in fixed deposits are mentioned below -
- Fixed deposit interest rate can be taxable as well
- It is a financial service provided by banks and NBFCs that entails the lump sum deposit of funds for a predetermined time frame
- A tax-saving fixed deposit has a 5-year term.
- When a tax-saving FD matures, the maturity amount is credited to the savings account linked to the FD
Things to Keep in Mind Before Investing in Fixed Deposit
Keep the below things in mind before investing in fixed deposit
- Keep an eye on interest rates offered by different banks on fixed deposits.
- Invest in multiple fixed deposits in multiple banks
- Invest in fixed deposits with different tenures.
FAQs on Fixed Deposit Trends in India
- Can fixed deposit combat India's inflation?
Due to India's high inflation rate, your fixed deposit may not provide returns that outpace inflation. However, by making a short-term investment in a fixed deposit, it is possible to beat inflation by a large margin and earn higher profits.
- Should I invest in short-term or long-term fixed deposits?
If you want to grow your money within a year, it is advisable to save with a short-term FD. If you believe that interest rates will eventually decline, you should choose an FD with a longer maturity time at the present interest rate.
- Do banks offer different interest rate to senior citizens?
Yes, banks usually offer an extra interest rate to senior citizens.
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