Fixed Deposit

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.

Fixed Deposit Calculator

Estimate the maturity value and interest income on your FD using Paisabazaar’s FD calculator.

The calculator is easy to use and gives results on the basis of a few basic inputs such as the deposit/ principal amount, FD interest and tenure.

Fixed Deposit Interest Rates 2024

Currently, FD interest rates of scheduled banks range from 2.50% p.a. to 9.00% p.a. for regular depositors for tenures ranging from 7 days to 10 years. Small Finance Banks and NBFCs offer the highest FD interest rates. Following them are PSU Banks and large Private Sector Banks. However, Private Sector Banks like Bandhan Bank, DCB Bank, Tamilnad Mercantile Bank, RBL Bank, IDFC First Bank, IndusInd Bank, Yes Bank, SBM Bank, CSB Bank and Federal Bank offer higher FD slab rates than the fixed deposit rates offered by other Private Sector Banks.

Comparison of Fixed Deposit Interest Rates in India

Fixed deposit rates as of 18 November 2024

Looking for Higher FD rates? Book an FD @7% p.a. and get a lifetime free credit card

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FD Interest Rates – Tax Saving FD

Fixed deposit rates as of 18 November 2024

Related Links:-

• Interest Rates of Tax Saving FD
• Tax Exemption on FD
• Best Tax Saving Schemes

FD Interest Rates – Leading Foreign Banks

Fixed deposit rates as of 18 November 2024

Fixed Deposit Rate – Company/Corporate

*At Monthly Rests. Additional interest of 0.25% p.a. is applicable on all renewals where the deposit is matured. Additional interest rate of 0.10% for women depositors.

Fixed deposit interest rates as of 18 November 2024

Fixed Deposit Rates – Senior Citizens

Banks and NBFCs usually offer senior citizens an additional interest rate of 0.50% p.a. over and above the FD interest rates offered to other depositors. Many banks, under their special schemes and/or for specific tenures, offer an additional interest rate of 0.20% – 0.50% over and above their senior citizen FD rates. For instance, senior citizen FD rates offered under SBI Wecare Deposit Scheme are 50 bps or 0.50% higher than the FD rates offered to SBI senior citizens. Furthermore, some banks and NBFCs also offer additional interest rates to super senior citizens (age 80 years and above). For instance, Indian Bank offers additional interest rates of 0.75% p.a. to FD depositors aged 80 years and above.

Types of Fixed Deposit

Different fixed deposit schemes cater to the requirements of different customer segments. To help you make the most of your savings, below are the types of fixed deposits.

• Standard Fixed Deposit can be opened by Resident Indians, Sole Proprietorship Firms, Partnership Firms, Limited Companies, Hindu Undivided Families, etc. Its interest rates are usually higher than the savings account interest rates.
• Tax-saving FD can be opened by Resident Individuals and Hindu Undivided Families only. It allows depositors to claim tax deduction of up to Rs. 1.5 lakh on the principal component under Section 80C. It also has a lock-in period of 5 years.
• Floating Rate Fixed Deposit has its interest rate linked to a reference rate, like the RBI’s Repo Rate and T-Bill Rate. Thus, its returns depend on the movement in the reference rate.
• Flexi FD allows depositors to link their FDs with their savings or current account. In case of fund deficit in the linked savings or current account, the linked deposit amount can be partially broken and the remaining deposit amount will continue to earn the FD interest rate. It offers higher liquidity and flexibility than normal FDs and higher interest rates than regular savings accounts.
• Senior Citizen Fixed Deposit can be opened by individuals aged 60 years and above. Interest rates offered on this scheme are usually 50 bps higher than regular Fixed Deposit rates. Some banks/ NBFCs under special schemes and for specific tenures also offer additional interest rates of 0.2%- 0.3% over and above the senior citizen FD rates. Additionally, some banks/ NBFCs also offer additional interest rates to super senior citizens (age 80 years and above).
• Corporate Fixed Deposit is offered by Housing Finance Companies (HFCs) and Non-Banking Financial Companies (NBFCs) and usually has interest rates higher than bank FD interest rates.
• Cumulative FD gives you the benefit of compounding by adding the interest earnings added to the principal amount, giving you the benefit of compounding.
• In Non-cumulative FD, the interest earned on the investment amount is payable at regular intervals, i.e., monthly, quarterly, half-yearly or annually.
• Callable FD allows depositors to withdraw their fixed deposit before it reaches maturity. However, depositors might have to pay a penalty on pre-closing this type of FDs.
• Non-callable FD is opposite to Callable Fixed Deposits in a sense that the depositors can withdraw their investments only at maturity. Also, the interest rates offered on non-callable FDs are usually higher than the interest rates offered on callable FDs.

Types of FD for Non-Resident Indians (NRIs)

• NRE (Non-Resident External) Deposits is for Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs) who wish to deposit their foreign earnings.
• NRO (Non-Resident Ordinary) Deposit is for NRIs and PIOs who want to deposit their income earned through Indian sources.
• FCNR (Foreign Currency Non-Resident) Deposit is for NRI and PIO customers who want to deposit their funds generated/earned overseas.
• RFC (Resident Foreign Currency) Deposit allows NRIs and PIOs, who after being a resident outside India for a year or more are returning to India, to open fixed deposits in foreign currencies with banks in India. The primary objective is to allow such depositors to earn higher returns, without any exchange rate risk. These deposits can only be opened with funds generated/earned overseas in foreign currencies.

Benefits of Fixed Deposit

• Guaranteed returns
• Up to Rs 5 lakh insured under DICGC
• Tax benefit of up to Rs 1.5 lakh under Section 80C on opening tax-saving FDs
• Use as collateral to avail loan or secured credit cards

Features of Fixed Deposit (FD)

The common set of features of a fixed deposit is as below:

• Low Deposit Amount: The minimum deposit amount required to book an FD is Rs 100, which may vary across banks and NBFCs.
• Fixed Tenure: Choose FD tenure anywhere from 7 days to 10 years.
• Fixed Interest Rates: The interest rates remain same till the maturity or renewal of the FD. However, some banks also offer floating fixed deposit schemes wherein the FD rates are linked to external benchmark and thus, may change as per the movements in the linked rates. For instance, the FD rates SBI offers Floating Rate Bulk Term Deposit scheme wherein the Fixed Deposit interest rates are linked to repo rate.
• Multiple Interest Payout Options: Choose from multiple interest payout options at monthly, quarterly, half-yearly or yearly frequency or opt for cumulative option wherein the interest earned on the principal is reinvested to give you the benefit of compounding.
• Premature Withdrawal: Premature withdrawal is allowed, subject to penal interest rates
• Loan against FD: Leverage FDs to avail loans while earning interest on the pledged FDs.

Eligibility Criteria – Fixed Deposit

• Residents
• Hindu Undivided Families (HUFs)
• Sole Proprietorship Firms
• Partnership Firms
• Limited Companies
• Trust Accounts, etc.

Documents Required to Open a Fixed Deposit

Usually, customers book FD in the bank where they already maintain a bank account. As banks already have the KYC details of their existing customers, new documents might not be needed to open a fixed deposit account.

However, new customers will be required to furnish their identity proof and address proof such as

• Aadhaar Card,
• PAN Card,
• Driver’s License,
• Passport, etc.

for KYC (Know Your Customer) verification and recent coloured passport-sized photographs to open an FD account in a new bank.

How to Open FD Online?

Customers can open a fixed deposit account online through the bank’s net banking platform or through its mobile application such as YONO SBI.

How to Open Fixed Deposit Offline?

To open a fixed deposit offline, customers can visit the banks and financial institutions where they already maintain their bank accounts.

How to Choose the Right Fixed Deposit?

To choose the right fixed deposit scheme, know your investment horizon and liquidity requirements. When making the choice, consumers should also compare prevailing FD interest rates across banks and check for interest pay-out options, special interest schemes and additional facilities such as secured credit cards, loan against FD, sweep-in and sweep-out facility, etc.

Why Invest in Fixed Deposits?

1. Guaranteed Returns on Investment

FD interest rates booked at the time of opening an Fixed Deposit account remains the same till its maturity, regardless of any changes in the banks’ FD card rates in the interim. For instance, if an individual opens a bank fixed deposit of 3 years tenure at 6% p.a., the interest rate will remain the same till the completion of its 3 years tenure. This offers a high degree of income certainty in FDs, even higher than those offered by most small saving schemes.

2. Capital Protection

Fixed deposits booked with the scheduled banks are covered under the deposit insurance program of DICGC, a subsidiary of RBI. The insurance cover is applicable on cumulative bank deposits, which include fixed deposits, savings account, recurring deposits and current account, of up to Rs 5 lakh per bank per depositor, in case of bank failure.

3. Tax Deduction under Section 80C 

Many banks and NBFCs offer 5-year tax-saving FD scheme with lock-in period of 5 years. The principal component of up to Rs 1.5 lakh each financial year can be claimed as tax deductions u/s 80C of the Income Tax Act. However, the interest component is taxed as per the tax slab of the depositor.

4. Loan against Fixed Deposit

Depositors can leverage their FDs to avail loans. Loans against FD are usually offered in the form of overdraft facility, wherein the credit limit is sanctioned on the basis of the Fixed Deposit amount pledged as collateral and the interest is also levied only on the amount drawn till its repayment. Moreover, the borrower continues to earn interest on the pledged FDs during the loan tenure. Withdrawals can be made anytime up to the credit limit from their overdraft account and repay it as per their repayment capacity. These features of loans against FDs make them an excellent tool for mitigating frequent liquidity and cash flow mismatches, without requiring prematurely closing FDs and incurring premature withdrawal penalties.

5. Credit Card against Fixed Deposit

Depositors having nil or low credit score can leverage their Fixed Deposits to avail secured credit cards. As the transactions made through secured cards are reported to the credit bureaus, disciplined usage of secured credit cards can help in building or improving one’s credit score. Such cards can also be helpful for those who fail to avail regular credit cards due others reasons like inadequate income, unserviceable location, employer’s profile or job profile. Paisabazaar, in partnership with SBM Bank (India) Ltd., issues credit card against FD – Step UP Credit Card. It’s a secured credit card issued against fixed deposits opened with SBM Bank. The card is a credit score builder best suited for consumers lacking credit access due to ‘no’ or ‘damaged’ credit history. Other features available on this credit card includes 90% credit limit on the fixed deposit amount and the facility to use the virtual credit card as soon as the Fixed Deposit is booked. The credit card also comes with attractive offers and discounts from top brands like Zomato, Swiggy, Nykaa, BookMyShow, Big Basket, Lifestyle, Yatra, Croma, Reliance Digital, etc.

FAQs on Fixed Deposit

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.

What is the minimum lock-in period for a tax-saving FD?

Tax-saving fixed deposit schemes have a lock-in period of 5 years.

Is the interest earned on a fixed deposit taxable?

Yes. The interest earned on an FD is taxable. However, as per the Section 80C of the Income Tax Act, 1961, investors can claim deductions for up to Rs. 1.5 lakh per financial year.

What is the FD interest rate for senior citizens?

Most of the banks provide senior citizens with preferential FD rates (e.g., 0.50% extra). For banks like Axis Bank, preferential interest rates are awarded at different proportions for select tenure.

What is the minimum deposit amount allowed for opening an FD?

The minimum amount set by banks and NBFCs for opening a FD is generally set at Rs. 1,000. Public sector banks may have lower minimum deposit criteria while some large private sector banks have set minimum deposit requirement of Rs 5,000. However, a tax-saving 5-year fixed deposit can be opened with an amount as low as Rs. 100.

How much tax is deducted on FD interest income?

TDS @10% is levied on interest income of more than Rs. 40,000 for regular individuals and Rs. 50,000 for senior citizens. For Company/Corporate Fixed Deposits, this limit has been set at Rs. 5,000.

Is it compulsory to submit a PAN to open an FD?

Yes. It is compulsory to quote your PAN when applying for a fixed deposit. However, if you do not have a PAN, you need to submit duly filled Form 60/61 (not being a company or a firm).

Is it safe to open Fixed Deposit in Small Finance Banks?

Yes. Small finance banks are regulated by the Reserve Bank of India. Also, deposit insurance of up to Rs. 5 lakh by DICGC is provided on these fixed deposits.

What is NRE fixed deposit?

The full form of NRE Fixed Deposit is Non-Resident External Fixed Deposit. This Fixed Deposit is for Non-Resident Indians (NRIs). They can deposit their foreign earnings in an Indian Account. Interest earned on an NRE FD is not taxable in India. The account is maintained in INR which means that the money deposited is converted as per the later forex rates.

What is the difference between NRE FD and NRO FD?

NRE Fixed Deposit (Non-Resident External) is for NRIs to remit/transfer their foreign earnings to an Indian account. NRO Fixed Deposit (Non-Resident Ordinary) is for NRIs to manage their income earned in India.

Can depositors get interests on a monthly basis?

Yes, non-cumulative fixed deposits have this option. You can choose to have interest in your account on a monthly basis.

What benefits are offered to senior citizens under FD schemes?

Senior citizens get an additional interest (usually up to 0.50%, approximately) on the same FD scheme. Banks like SBI, ICICI Bank and HDFC Bank are offering extra interest of up to 0.50% on the existing preferential FD interest rates to the senior citizens.

Does premature withdrawal negatively affect Fixed Deposit earnings?

Yes. You have to pay a penalty of up to 1% on premature closure. This 1% of penalty is levied on the effective rate of interest which reduces your earnings.

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.