Fixed Deposits scheme(FD)
Fixed deposits scheme is an oldest and safest investment method in India. It designed for the low-risk investors and who wants to return the principle amount with some interest with guaranteed. Fixed deposit interest rates are usually varies from 4.5% per annum to 8% per annum based on the various banks.
Table of Contents
Why should invest in Fixed deposits?
- Fixed deposits is one of the safest investment unlike mutual funds, stock markets it provides guranteed return in a fixed tenure.
- Flexible tenures up to 10 years with no upper limit for deposits.
Types of fixed deposits in India
Regular Fixed Deposits:
- Tenure range from 7 days to 10 years.
- Withdrawal anytime and interest slightly higher than savings account.
Tax- saving fixed deposits
- Fixed locked-in period of 5 years.
- Income tax exemption on principal amount upto 1.5 lakhs.
Cumulative fixed deposits
- Best for short term/ medium term investors.
- Tenure from 7 days to 1 years. Interest calculated quarterly and paid at the time of maturity.
Non-Cumulative fixed deposits
- Ideal for senior citizen for monthly pensions.
- Interest paid in monthly, quarterly, half-yearly or yearly.
Senior citizen fixed deposits
- 0.5% more return for senior citizen.
- Flexible tenures.
- Auto fixed deposit if the amount is higher than threshold amount.
- Account holder set upper limit for savings account amount, if amount is higher than it will automatically convert into fixed deposits.
Fixed deposits for Non-resident Indian
NRE fixed deposits
- Ideal for NRI’s wants to convert money into Indian currency and invest into fixed deposits for regular income.
- Tax- free interest under this FD.
NRO fixed deposits
- Hassle-free investment in any currency under this FD.
- 30% tax applicable on interest.
Fixed deposits scheme by Non-Banking financial institutes
In India, Reserve bank of India allows to non-banking institutes for fixed deposits and they are provide attractive interest rates for the Indian customer. But we are not recommend to invest into it because RBI not taken any responsibility for risk or loss money.
Frequently asked questions
- Yes. It is required to have savings account in same bank.
- 1.5 Lakhs is maximum tax exemption under Section 80C IT Act,1961
- Yes, Many banks provide loan against fixed deposit. It is based on the tenure and amount.
- Considering age, Regular fixed deposit are more suitable.Also, invest lump-sum money into the Cumulative fixed deposit for short term.
- Considering age, ideal fixed deposits is senior citizen FD, also invest in Non-Cumulative fixed deposits. Non-cumulative FD returns interest every month.
- In India, each year ICRA provides ratings for NBFC based on the performance.Investor can invest in AAA category companies for safe return.