What is a Fixed Deposit?

Fixed deposit (FD), also referred as ‘time deposit’ or ‘term deposit’, is an investment option that allows depositors to park their idle money for a fixed period and earn fixed interest on it at regular intervals during the chosen tenure or at maturity.

It offers income certainty and capital protection, making it a popular investment choice, especially among new and conservative investors. These features also make fixed deposits an ideal instrument for realizing short-term financial goals and for parking emergency and post-retirement corpuses.

FDs are one of the oldest and most common methods of investing. When it comes to assured returns, choosing the right type of savings scheme makes all the difference. Fixed Deposits let you make the most of value-added benefits as you create wealth at low risk.Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits.

Types of Companies offering Fixed Deposits

Eligibility Criteria – Fixed Deposit

FAQ's

Why should I invest in FD?

Reasons to investment in FD are as below:

  • Guaranteed returns on investment
  • Up to Rs 5 lakh insured under DICGC
  • Tax benefit of up to Rs 1.5 lakh under Section 80C available only on tax-saving FDs
  • Use as collateral to avail credit card and loan

How do I choose a fixed deposit?

When choosing a fixed deposit scheme, factor in your liquidity, investment objective, investment horizon, current FD interest rates and interest pay-out options. Additionally, check for special interest schemes and additional facilities such as secured credit cards, loan against FD, sweep-in and sweep-out facility, etc.

Who can invest in an FD scheme in India?

Resident individuals, private and public limited companies, Hindu Undivided Families (HUF), partnership firms, societies, governments, local bodies, etc. can book fixed deposits.

What are the minimum and maximum terms of Fixed Deposit schemes?

The tenure of FD schemes usually varies from 7 days to as long as 10 years. However, NBFCs offer Fixed Deposit investment for a period ranging from 12 months to 60 months and HFCs offer Fixed Deposit tenures of 12 months to 120 months of fixed deposits.

How will I receive the FD maturity amount?

In case of existing customers, the FD maturity amount will be directly credited to the linked bank account. Those not having their bank account(s) with the same bank will receive the money through cash (up to a certain amount), pay order, demand draft or get it credited to another bank account through electronic channels like NEFT/RTGS.

Can minors open a fixed deposit account?

Many banks and NBFCs offer Fixed Deposit investment options to minors with a parent/guardian acting as co-applicant. Post Office Fixed Deposit or Post Office Time Deposits can be opened in the name of a minor (above the age of 10 years) and be operated by a legal guardian till the minor attains 18 years of age.