Finding the best Fixed Deposit (FD) scheme is very important to get the best returns out of your investment. To choose the right FD scheme, you need to consider certain factors before applying for a term deposit. It is wise to consider factors like interest rate paid, credibility of the bank or financial institution offering the FD, total yield, interest compounding frequency, etc. In india, FDs are offered by both banks and Non-Banking Financial Companies (NBFCs). NBFCs or corporate company FDs usually pay a higher rate of interest on time deposits when compared to banks.
It is necessary to do some research before you put your hard-earned money in a fixed deposit scheme. In this page, you can read about how you can choose the best FD scheme.
How to choose the best fixed deposit?
The following are the factors to consider before applying for an FD:
Rate of interest paid: One of the most important factors to take into account before choosing an FD scheme is the rate of interest that is paid. All investors must compare FD interest rates and choose a good deal.
Credibility of FD provider: Do not just blindly go for the FD with highest interest rate. There are other factors that also need to be considered like the credibility of the organisation that is offering the term deposit. Preferably, go for ‘A’ rated schemes and consider rating from organisations like ICRA and CRISIL.
Tenure: Another factor that determines the rate of return of your investment is the duration for which the investment is held.
Interest compounding frequency: Find out how the interest is calculated on your investment. If you choose to reinvest the interest that you earn, the total return on the investment will be much higher.
Interest payout option: See if the FD you are investing in gives you a wide range of interest payout options. Take a look at the frequency on interest payouts. In most cases payments are made monthly, quarterly, annually or half-yearly.
Penalty rates: The other thing to check before putting your money in an FD is whether there is any fee levied in case you want to prematurely break your deposit.
Bank fixed deposits
Bank fixed deposits, one of the most sought-after savings schemes for millions of investors in India, offer higher rates of interest than savings bank accounts. The rates of interests for fixed deposits vary depending on the bank. Bank fixed deposits are regulated by RBI, which guarantees up to Rs.1 lakh against insolvency of the bank. Bank fixed deposits typically offer lower interest rates compared to corporate fixed deposits but provide assured returns.
Unlike corporate fixed deposit schemes, bank fixed deposits schemes are not dependent on ratings.
Experts suggest sticking to PSU banks or select private sector banks for safe returns.
Investors should consider several parameters such as maturity amount, interest, interest after tax and inflation-adjusted returns among others.
You need to zero in on the amount to be held in a fixed deposit in addition to the deposit period.
Different banks offer varied interest rates and tenure. Investors need to make a comparative analysis prior to depositing money in a fixed deposit.
You have to study the premature withdrawal clauses which vary from bank to bank.
Different banks offer several fixed deposit schemes
Top banks offering high interest rates on FDs
The table below shows high interest rates offered by some banks on fixed deposits:
Name of the bank
Rate of interest
1 year to less than 2 years
1 year to less than 2 years
1 year to less than 2 years
1 year and 1 day
Lakshmi Vilas Bank
How to choose a good company FD scheme?
Check the promoters' history, company's repayment record and balance sheet among others. In some cases, a company with a low credit rating is more likely to offer higher rates to attract investors.
Investors should avoid companies which offer more than 15% interest rate, companies not paying regular dividends to the shareholder besides partnership firms since it is difficult to ascertain their performance.
Investors should stay away from unrated deposit schemes by small manufacturing companies. Only 'A' rated NBFCs are eligible to accept deposits as mandated by RBI. Investors should look for AA or AAA rated companies with enjoy good reputation.
Longer the duration of investment, higher is the rate of interest offered. But you should be cautious about investing for a longer duration. It is more advisable to go for shorter duration deposits of around 1 year to 3 years to monitor company's rating and servicing.
Experts suggest diversification and investing in several good schemes rather than in just one scheme.
Investors should analyze the servicing standards of the company and consult the investment advisor for all transactions.
Investors should not only review a company’s profile but also its ratings. Ratings are given by credit rating agencies such as ICRA, CRISIL and CARE
Investors should also examine the lock in period of the deposit. Most deposit schemes have an initial lock-in of three to six months.
Investors should be wary of default risk, i.e, at maturity, companies may not return the amount and default (owing to bad performance and recession among others).
While bank deposits are secured by RBI, company deposits have no such back-ups and are, therefore, unsecured.
Top rated company deposit schemes in India
Bajaj Finance Ltd: Bajaj Finance Limited has good credit ratings from ICRA and CRISIL. They offer an interest rate of up to 8.10% for senior citizens, 7.85% for new customers and 7.95% for existing customers. These interest rates are applicable for deposits held for 3 years and above. The best part about this FD scheme is that customers get an additional 0.10% hike in interest rate for FD renewal. The minimum investment amount is Rs.25,000.
DHFL Aashray Deposit Scheme: This is a certified deposit scheme that offers an interest rate of 7.70% of all investments made for a tenure 1 year. There are both cumulative and non-cumulative deposits to choose from. The minimum deposit amount under this scheme is Rs.2000.
GRUH Finance Ltd: Rated by both CRISIL and ICRA, GRUH Finance limited pays interest at the rate of 7% to 7.5% on all deposits. They offer both cumulative and non-cumulative deposits. Read more for GRUH Finance Fixed deposit rate.
HDFC Premium Deposits: This is a good rated FD scheme that pays interest in the range of 7% to 7.5%. There are a wide range of options that an investor can choose from including investment amount and different interest payout options.
The following table shows details of the top rated corporate fixed deposits:
Government bonds are a good option to make an investment and it has all the qualities of a fixed deposit. They provide investors the same safety feature and come with flexibility. The main aim behind an FD is to earn a certain rate of interest and keep money saved in a safe and secure way. There are a number of options when it comes to FDs and people can invest in Scheduled Commercial Banks and other banks after taking a look at the respective credit ratings of the bank in question. On the other hand, government bonds are also a fixed deposit instrument.
Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.
I have invested some money through FD. My salary account is in SBI so i have a zero ATM charges and the limit is not actually set by SBI. They do have short term FDs which is pretty good. I have invested the money of Rs. 60000 and the interest rate is 10.01% for the tenure period of 16 months. There is no lockin period. There is no hassle to getting the money back.
I have invested the money in Dena bank through Fixed deposit and the growth is not that much good. They are not taking any hidden charges. Only because of the Government undertaken bank, i have selected them. They are providing a interest rate of 6% per annum. I have invested the money of Rs. 2 lakhs. There is a lockin period of 1 year.
I have opt for fixed deposit for the tax saving purpose because I have chosen five years tenure with AXIS Bank, still its going on. Only once I Invested my money it has the locking period of five years. I have option to check my transactions through mobile app. But I have concern about the interest rate is very lesser for this FD.
I had fixed deposit with SBI then I withdrawn the amount, I done Rs. 3 lakhs of investment on my daughter name then I taken the liquidity to purchase the land, at the time I struggled a lot to take that money because the process was difficult to withdrawn the money after seven months of tenure.
I had a Fixed Deposit with Union Bank of India and its closed 18 to 19 months due to personal reasons. I am doing investment but my experience is not good with FD account. In my home town, there is no other banks so just decided to go with this bank. The returns are good.
I have one FD with HDFC, I deposited Rs. 1 lakh, I was opt for 45 days of tenure. Finally I got 6.25% of interest for 45 days. It won't cover the tax, if we need tax benefits we should go for five years term. I can track the details through netbanking, on the maturity date the amount credits automatically in the account. Even the notification can customized.
HSBC staff wrongly pre closed my fixed deposit .. and calculated the interest rates wrongly and when asked them for clarification never got back .. even after following up with them repeatedly for more than 3 months.. would highly recommend not using their services.
Was this review helpful?
A V kumar
Reviewed on Aug 24, 2019
I do have a Fixed deposit account with SBI and it was carried out by Mom and even I have account for my daughter. Its still running and they have Google application separately to access online. The returns are good. I am doing monthly investment and it was opened quite a long may be 4 years.
I just opened a Fixed Deposit with ICICI BANK and have not done any survey on this. I am account holder with them so it was easy to do FD account even they are providing 7% interest rate. The process is very user friendly and never faced any hassle. I could access this account via online.
In post office rate of interest is higher for the fixed deposit when compared to the bank, I invested Rs. 5000 on monthly basis its comes in a year Rs. 60,000 after 5 years I got Rs. 3.75,000 I got Rs. 75,000 extra. The service is not comfortable if we have any relative who working there it would supportive or else difficult.
I have FD with SBI, I have opt for one year term there is no such limitation for depositing the money. The interest rate is good for the FD, the online banking is convenient to take liquidity. They resolve the queries on time. Its most safe and secured.
I have selected state bnak of indis fixed deposit amount 1 lakhs , Tenure 5 years and Rate of interest 8 percentage after renewal fixed deposit 6 percentage is very less .while document directly bank . Customer service is not good and responsive.
I activated FD account with Kotak, I have been maintaining this account since when I opened saving account, I converted Rs. 5000 for one year. They are providing interest around 7.6% per annum, the online netbanking and mobile app is very convenient for deposit to FD.
I have invested my FD with ICICI BANK and also have a 3in1 account with them. The interest rate is pretty good. Recently started before 6months, I can do premature withdrawal and also have selected a locking period of 3 years. The customer service is good and overall am satisfied with this bank.
My Post office branch is located in own campus hence there is no queue. I opened the fixed deposit, I made one time investment for five years its has tax exemption. They are providing 7% of interest for per annum. I believe it has online access as well.
Chosen my fixed deposit from State bank of India. I have invested the money of Rs. 57000 and SBI is a most popular bank all over the India and offering all the facilities compared to bank. Since i have a salary account with them, its easy to transfer the money. They are providing the interest rate of 6.5%.
Union of India fixed deposit is same as other investment. Being an existing customer I have opt for one year of fd, the online banking feature is good to open and closing the account, they was no charges for the liquidity of fund before the maturity.
Chosen my fixed deposit from state bank of India because the given rate of interest is high. They are not deducting any service charges. I have invested the money of Rs. 1 lakhs and there is no lockin period and i have chosen the plan for 1 year and they are giving a interest rate of 6.75%.
I am using the savings account with HDFC BANK since from last 5 years, the reason for taking the fixed deposit was they are giving good rate of interest. The application is easy to use with the bank and to check the status of the account.
I opened fixed deposit with ICICI it gives tax benefits upto 80 c section, I invest Rs. 50,000 as a one time investment it has the term of five years. The online banking is good to deposit the money to take the liquidity, I have option to track the FD details also netbanking.