What is a Fixed Deposit – A Guide to Secure Your Future Investment

What is a Fixed Deposit? 

Fixed Deposits (FDs) are widely favored due to their safety and stability in the investment landscape. A lump sum is deposited with a bank for a predetermined period, and a fixed interest is earned upon account initiation. Fixed deposit (FD) holders can opt for interest payouts at various intervals.  Typically, banks offer higher interest rates on fixed deposit accounts than on savings.    

Features and Benefits of Fixed Deposits   

Being one of the popular investment options in India, fixed deposits guarantee substantial returns. They are a preferred option if you have yet to have the appetite for risks. You can withdraw the amount before the date of maturity, but you might have to pay a certain amount as a penalty to the bank.  

Fixed deposits are still the better choice for getting a lump sum amount at a time when there’s some financial emergency. On that note, let’s understand the benefits/features of fixed deposits as an investment choice:

1. Assured Returns: FD investments guarantee assured returns. You are provided with guaranteed returns on investing funds as per the stated rate of return regardless of the current market situation. To understand your returns, you can try the fixed deposit calculator provided by banks on their websites. With its help, you can see interest rates/return rates on the amount you invested for a given period.  
2. Flexible Tenure: Another plus point of investing in a fixed deposit scheme is that the tenure is flexible. It is usually determined by the deposit holder, even though each bank has its minimum tenure requirements. Additionally, the holder can choose whether to redeem the fixed deposit upon maturity or extend it for the same period. 
3. Safety and Reliability: These are the other two primary features/benefits of fixed deposits. This investment choice is considered one of the most reliable, safe, and low-risk options. In case of any default, your deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to a certain amount. 
4. Ease of Investment: Opening a fixed deposit account is a straightforward process. It requires only minimal documentation, such as identification and address proof, and a simple application form. Most banks offer both online and in-branch options, making it convenient and quick to set up an account. 
5. Loan Against FD: A fixed deposit (FD) is a reliable instrument to have in case of financial emergencies. Securing a loan against a fixed deposit is straightforward, with some banks allowing you to borrow up to 95% of the deposit amount. This ease of access makes it a dependable investment option. 
6. Tax Deductions: Banks are only required to deduct tax on interest once it exceeds the threshold set by income tax guidelines. This offers reassurance to small deposit holders. 
7. Senior Citizen FD: Fixed Deposits present an attractive option with higher interest rates, providing a secure avenue to grow savings in retirement. These specialized accounts offer flexibility in terms of tenure and payout options, ensuring that retirees can tailor their investment strategy to match their income requirements. 
8. Periodic Interest Payouts: These further enhance the appeal of Fixed Deposits, offering investors the flexibility to receive returns at regular intervals, be it monthly, quarterly, or annually. This feature not only ensures a steady income stream but also facilitates better financial planning, particularly for those reliant on fixed income for day-to-day expenses. 
9. Regular Income: Fixed deposits can provide a steady source of income, particularly beneficial for retirees. Interest payments can be scheduled to be disbursed periodically, such as monthly, quarterly, or annually, offering regular financial support. This predictable income stream helps manage day-to-day expenses and manage financial planning during retirement. 
10. Capital Preservation: With a fixed deposit, your principal amount is preserved, ensuring that your initial investment is secure. At maturity, you are guaranteed to receive the total amount of your original deposit along with the accumulated interest. This makes it a safe and reliable investment option for securing your funds and earning returns. 
11. Diversification: Fixed Deposits contribute to portfolio diversification by offering a low-risk investment option. By allocating a portion of funds to Fixed Deposits, investors can mitigate overall risk in their investment portfolio while still enjoying a predictable return. This balance between stability and growth potential enhances the resilience of the portfolio, providing peace of mind to investors amidst market fluctuations. 
12. Liquidity: Liquidating a fixed deposit is relatively straightforward. For online fixed deposits, liquidation is possible only through net banking. Alternatively, most bank branches provide a form to facilitate the liquidation process.

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Evaluating the Different Types of Fixed Deposits

Fixed Deposits (FDs) come in various forms, each offering unique advantages tailored to different financial objectives. 

Conventional Fixed Deposit: Traditional FDs offer a straightforward investment option with a fixed interest rate and tenure. They provide stability and security, making them ideal for conservative investors seeking guaranteed returns. 

Tax-saving Fixed Deposit: Tax-saving FDs not only offer financial security but also provide tax benefits under Section 80C of the Income Tax Act. Investors can enjoy deductions on their taxable income by investing in these FDs, making them a popular choice for tax planning. 

Senior Citizen Fixed Deposit: Senior Citizen FDs cater specifically to retirees, offering higher interest rates than conventional FDs. They provide investors with a continuous source of income during retirement and offer flexible payout options to suit the needs of elderly investors. 

Cumulative Fixed Deposit: Cumulative FDs reinvest the interest earned back into the principal amount, resulting in compounding returns. They are suitable for long-term investors looking to maximize their returns over the tenure of the deposit. 

Non-cumulative Fixed Deposit: Non-cumulative FDs offer the flexibility of receiving periodic interest payouts, such as monthly, quarterly, or annually. They are ideal for investors seeking regular income streams to meet their financial needs while still preserving the principal amount.

Flexi Fixed Deposits: Alternatively termed Flexible Fixed Deposit, this type of banking product blends the characteristics of a Fixed Deposit with those of a Savings Account. They are available through banks. Flexi Fixed Deposit offers enhanced flexibility and liquidity to account holders alongside a higher interest rate compared to standard savings accounts.

Corporate Fixed Deposits: A Corporate Fixed Deposit (company FD) is a fixed-term deposit held at predetermined interest rates. These deposits are provided by both financial and non-banking financial companies (NBFCs).

Am I Eligible for Fixed Deposits? 

Determining eligibility for fixed deposits is relatively straightforward, as most financial institutions have minimal requirements for opening such accounts. However, eligibility criteria may vary slightly among different financial institutions and jurisdictions. Additionally, some banks may offer specialized fixed deposit accounts, such as senior citizen fixed deposits or accounts for minors, with tailored eligibility requirements. Therefore, individuals interested in opening a fixed deposit account should contact their preferred bank or financial institution for specific eligibility details. 

Individuals meeting the criteria below are deemed eligible: 

• Legal Age: Fixed Deposit applicants should be 18 years at least to get a fixed deposit account.  
• Residency Status: In most cases, applicants must be residents of the country where they are applying for the fixed deposit. 

• Identity and Address Proof: Financial institutions require valid identification and address proof documents. 
• Source of Funds: Applicants must demonstrate a legitimate source of funds for the initial deposit into the fixed deposit account. 
• Minimum Deposit Amount: Most banks in the initial phase ask for a minimum deposit amount to open your fixed deposit account.  
• Documentation: Applicants need to fill out a simple application form and comply with additional document requirements specified by the bank.  

That said, let's understand the eligibility criteria of each sub-group mentioned below: 

• Indian Nationals: Indian citizens who fulfil the bank's requirements for identity, address proof, and minimum deposit amount. 
• NRIs (Non-Resident Indians): Indian citizens living abroad who meet the bank's criteria for NRI status should adhere to the regulations predetermined by the Reserve Bank of India (RBI) for opening NRI accounts. 
• Minors: Individuals under the legal age of 18 who can open accounts with a guardian or parent as a joint holder. 
• Elderly People: Senior citizens above a certain age (typically 60 or 65 years old) who may be eligible for special accounts offering higher interest rates. 

• Company Partnerships: Partnerships registered under the Partnership Act require documentation such as partnership deeds and KYC documents of partners. 
• Companies: Registered companies and corporate entities with proper documentation, including incorporation certificates, board resolutions, and KYC documents of authorized signatories. 
• Clubs and Societies: Registered clubs, societies, or associations with governing documents and proof of identity/address. 
• Single-person Business: Sole proprietorships or self-employed individuals who meet the bank's requirements for identity, address proof, and business registration documents. 
• Investors (Alone or in Groups): Individuals or groups of investors who meet the bank's criteria for identity, address proof, and minimum deposit amount. Group investors may need additional documentation, such as partnership deeds or agreements. 

Why Invest in Fixed Deposits? 

Investing in fixed deposits offers numerous advantages, making it a popular choice for many investors: 

1. Competitive Interest Rates: Fixed deposits typically offer competitive interest rates, providing a stable and predictable source of income. Check the different Bank FD rates before investing in Fixed Deposit.
2. Flexible Tenure: Investors can choose the tenure of their fixed deposit, ranging from a few months to several years, to suit their financial goals and needs. 
3. Flexible Deposit Amount: Fixed deposits allow investors to deposit varying amounts of money, making it accessible to individuals with different financial capabilities. 
4. Risk-Free Investment: Fixed deposits are considered low-risk investments as they are backed by the bank's guarantee, ensuring the safety of the principal amount. 
5. Guaranteed Fixed Returns: Investors receive fixed returns on their investment, unaffected by market fluctuations or economic conditions, providing certainty and peace of mind. 
6. Liquidity: Fixed deposits offer liquidity as investors can withdraw their funds before maturity, albeit with some penalty or loss of interest. 
7. Immunity to Market Risks: Unlike other investment options like stocks or mutual funds, fixed deposits are not affected by market volatility, offering stability and security. 
8. Tax Savings: Certain types of fixed deposits offer tax-related benefits, as mentioned under specific sections of the Income Tax Act. This includes tax-saving fixed deposits. They help investors save on taxes while growing their wealth.

What Role Does Fixed Deposit Play on Your Portfolio? 

Fixed deposits play a crucial role in balancing your investment portfolio, offering stability and security amidst market fluctuations. By including fixed deposits in your portfolio, you ensure that a portion of your investments remains immune to market risks, helping to maintain a balanced risk-reward profile. Additionally, fixed deposits contribute to keeping the net value of your portfolio positive, providing a reliable source of returns regardless of market conditions. Furthermore, fixed deposits are particularly suitable for short-term financial goals, offering flexibility in terms of tenure and providing guaranteed returns within a relatively short time frame. 

• Balance in your Portfolio: Fixed deposits provide stability to your investment portfolio by balancing the higher-risk assets like stocks or mutual funds. They act as a counterbalance, ensuring that your portfolio is adequately exposed to market volatility. 
• Net Value of your Portfolio Remains Positive: Since fixed deposits offer guaranteed returns, they help maintain a positive net value in your portfolio. Even if other investments experience fluctuations or downturns, the steady returns from fixed deposits ensure that your overall portfolio value remains stable or continues to grow. 
• Suitable for Short-Term Goals: Fixed deposits are ideal for achieving short-term financial goals due to their flexibility in tenure. Whether it's saving for a vacation, purchasing a vehicle, or building an emergency fund, fixed deposits provide a secure and predictable avenue for achieving these objectives within a relatively short time frame.

How does a Fixed Deposit Account Work? 

A Fixed Deposit account serves the purpose of an atypical financial instrument, allowing you to deposit a substantial amount for a definite period at a predetermined interest rate. Fixed Deposit accounts offer a safe and predictable investment option, making them popular among risk-averse investors looking to earn a stable return on their savings. 

Here is a step-by-step explanation of how a Fixed Deposit account works: 

1. Opening a Fixed Deposit Account 

To open a Fixed Deposit account, first choose the bank or financial institution where you want to invest, then decide the amount of money to deposit, considering that different banks have varying minimum and maximum deposit limits. Finally, select the tenure for your investment, which can range from a few days to several years, commonly from 7 days to 10 years. 

2. Interest Rate 

The interest rate for a Fixed Deposit is determined at the time of account opening and remains unchanged throughout the tenure. The interest rates, however, vary depending on the length of the deposit period and the policies of the bank, with senior citizens often receiving higher interest rates. 

3. Interest Calculation 

Interest on Fixed Deposits is typically compounded quarterly, though some banks may offer monthly, half-yearly, or annual compounding options. Most Fixed Deposit investments use compound interest that is calculated on both the initial principal and the accumulated interest from previous periods. 

4. Interest Payout Options 

In a Cumulative FD, interest is compounded and paid out along with the principal amount at the end of the tenure. In contrast, a Non-Cumulative Fixed Deposit pays out interest at regular intervals, which can be monthly, quarterly, half-yearly, or annually. 

5. Premature Withdrawal 

Withdrawing a Fixed Deposit before its maturity date usually incurs a penalty, which can be a reduced interest rate or a fee. Some banks allow partial withdrawals, but the remaining balance may continue to earn interest at a reduced rate. 

6. Maturity 

At the end of the tenure, you receive both the principal amount and the interest earned. You can then choose to reinvest the matured amount in a new Fixed Deposit, potentially at a different interest rate, or withdraw it. 

7. Tax Implications 

Fixed Deposit interests are taxable and should be declared as income, being taxed according to your income tax slab. Banks may also deduct Tax Deducted at Source (TDS) on the interest if it exceeds a certain threshold, such as INR 40,000 per year for non-senior citizens in India. 

8. Documentation Required 

When opening a Fixed Deposit account, you need to provide proof of identity such as a PAN card, passport, or voter ID, along with address proof like utility bills or an Aadhaar card. Additionally, you'll need to fill out the account opening form, which is specific to the bank or financial institution where you are opening the account. 

1. Additional Features 

With the nomination facility, you have the option to designate a recipient to receive the Fixed Deposit amount in the event of your demise. Additionally, some banks provide the opportunity to obtain loans or overdrafts against the security of the account, offering a convenient financial solution based on your deposited amount.

How is the Interest of Fixed Deposit Calculated 

The interest on a fixed deposit (FD) is typically calculated using the following formula:

Interest=Principal × Interest Rate × Number of Days/ Total Days in a Year

Where:

• Interest is the total interest earned.

• Principal is the initial amount deposited.

• Interest Rate is the annual interest rate (expressed as a decimal).

• Number of Days is the number of days the fixed deposit is held.

• Total Days in a Year depends on whether the bank follows a 365-day or 360-day year for interest calculation purposes.

Once the interest is calculated using this formula, it is added to the principal amount to determine the total amount payable at maturity.

An Important Point to Consider:

The interest rate and method of calculation may vary depending on the bank's policies and the type of fixed deposit. Some banks may compound interest on a monthly, quarterly, or annual basis, while others may offer simple interest. Therefore, it is advisable to check with the specific bank or financial institution for details on their interest calculation method.

What Does Loan Against Fixed Deposit Mean? 

You can get a loan approved against your fixed deposit. It is considered a financial arrangement that allows holders to use their fixed deposit as collateral and secure a loan from a bank or financial institution. In simpler terms, it will enable Fixed Deposit account holders to borrow money against the value of their fixed deposit without needing to break the deposit prematurely. A loan against fixed deposit offers a convenient and cost-effective way for individuals to access funds quickly without liquidating their FD, especially during financial emergencies or when they require short-term financing. A loan against fixed deposit offers a convenient and cost-effective way for individuals like you to access funds quickly without liquidating their funds in the account, especially during financial emergencies or when they require short-term financing. 

Here is how it works: 

• Collateral: The fixed deposit serves as collateral for the loan. The bank holds the FD as security against the loan amount disbursed. 
• Loan Amount: The loan amount typically falls between the (70% to 90%) bracket of the value of the fixed deposit, depending on the bank's policies and the tenure of the FD. 
• Interest Rate: The interest rate charged on the loan against FD is usually lower compared to other forms of loans because the FD acts as security. It's often a small percentage above the FD interest rate. 
• Tenure: The tenure of the loan is usually aligned with the remaining tenure of the fixed deposit. Once the FD matures, the loan must be repaid in full, including the principal and interest. 
• Loan Repayment: The borrower has the option to repay the loan in EMIs (Equated Monthly Instalments) or as a lump sum amount at the end of the tenure. The interest is typically calculated on a reducing balance basis. 
• Impact on FD: The FD continues to earn interest, but the loan amount against it reduces the compelling interest earned. However, the FD remains intact, and the borrower continues to receive the principal amount along with interest upon maturity, provided the loan is repaid on time.

Are the Returns on Fixed Deposits Taxable? 

The returns (interest earned) on Fixed Deposits are taxable in many jurisdictions. The specific tax implications can vary depending on the country and its tax laws. 

The taxation of returns, however, has some essential points to remember: 

• Interest Income: The amount earned as interest on fixed deposits is considered income and is subject to tax. This interest is typically added to your total income for the year and taxed according to your applicable income tax slab. 
• Tax Deducted at Source (TDS): In some countries, banks may deduct tax at source (TDS) before paying out the interest to you. The rate of TDS can vary. But you can claim a refund for the TDS deducted if your overall income falls below the mentioned taxable limit, 
• Tax Forms and Declarations: If you expect your income to be below the taxable limit, you may be able to submit specific forms to your bank to avoid TDS. For instance, in India, submitting Form 15G (for individuals below 60) or Form 15H (for senior citizens) can help prevent TDS if your income is below the exemption limit. 
• Reporting Interest Income: It's essential to report the interest income from FDs in your annual tax return, even if TDS has been deducted. You need to declare this income under the "Income from Other Sources" section in your tax return. 
• Exemptions and Deductions: Some countries might offer certain exemptions or deductions on interest income. For example, in India, interest earned up to INR 50,000 in a financial year by senior citizens is exempt under Section 80TTB.

What is Tax Saving Fixed Deposit

Tax Saving Fixed Deposits are secure investment options designed by banks and financial institutions that provide tax benefits under certain regulations. You can opt for a Tax-Saving Fixed Deposit if you wish to 

save on taxes while earning a fixed return on your investment. However, the mandatory lock-in period and the taxable nature of the interest earned should be considered when choosing this investment option.

How to Open a Fixed Deposit Account 

Opening a fixed deposit account is a simple process that typically involves the following steps:

1. Choose a Bank: Select a bank or financial institution that offers fixed deposit accounts. Consider factors such as interest rates, tenure options, and customer service.
2. Gather Required Documents: Collect the necessary documents for opening a fixed deposit account, including:

• Proof of identity (such as passport, driver's license, or Aadhar card)

• Proof of address (such as utility bills or rental agreement)

• Passport-size photographs

• PAN card (for tax purposes)

3. Visit the Bank: Visit the branch of your chosen bank where you wish to open the fixed deposit account. Alternatively, some banks offer the option to open an account online through their website or mobile app.
4. Fill out Application Form: Request and fill out the fixed deposit application form provided by the bank. Provide accurate information and specify details such as deposit amount, tenure, and maturity instructions.
5. Submit Documents: Submit the required documents along with the filled application form to the bank representative. Ensure that all documents are complete and up to date.
6. Make Deposit: Deposit the desired amount into the fixed deposit account. Some banks may have a minimum deposit requirement, so make sure to meet this criterion.

7. Receive Confirmation: Once the account is opened and the deposit is made, you will receive a confirmation from the bank. This may include a fixed deposit receipt or confirmation email.
8. Monitor Account: Keep track of your fixed deposit account and monitor its performance over time. You may receive periodic statements from the bank detailing your account activity and interest earned.

What are the Documents Required? 

The below-mentioned documents serve as proof of identity and address for KYC compliance when opening a Fixed Deposit account. Banks may require one or more of these documents to verify the customer's identity and ensure regulatory compliance. It's essential to check with the respective bank for their specific requirements regarding KYC documentation. 

• The Passport: A valid passport serves as proof of identity and is widely accepted by banks for opening FD accounts. It contains essential details such as the holder's name, photograph, date of birth, and nationality, making it a reliable document for KYC (Know Your Customer) purposes. 
• The Driving License: A driving license issued by the relevant transport authority also serves as a valid proof of identity for opening an FD account. It contains the holder's details, photograph, and signature, providing authentication of identity. 
• Proof of Possession of Aadhaar Number: The Aadhaar card number is considered a unique identification code for every citizen of India. The Government of India issues it as proof of identity and address. Presenting the Aadhaar card along with other KYC documents is a common requirement for opening FD accounts. 
• The Voter's Identity Card: The voter card is issued by the Election Commission of India. This document is accepted as alternate physical evidence for identity verification. It contains the holder's photograph, address, and other details, serving as valid proof of identity for opening FD accounts. 
• Job Card Issued by NREGA: The job card issued under the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) serves as yet another piece of paper evidence. Some banks often accept this as proof of identity and address. An officer of the State Government must duly sign it for authentication. 
• Letter Issued by the National Population Register: The National Population Register (NPR) issues a letter containing information related to your details, like your name and address. The banks may also accept these banks as evidence of your identity and address when opening FD accounts. 

The Final Takeaway

Fixed Deposits serve as a secure and reliable investment option for individuals seeking stable returns on their savings. With fixed interest rates and various tenure options, these investment options offer predictability and flexibility to investors. While they provide a steady income stream, it is essential to consider factors such as taxation, premature withdrawal penalties, and reinvestment options. Overall, Fixed Deposits remain a popular choice for those prioritizing capital preservation and steady growth in their investment portfolio.

Glossary Terms

Annual Yield: The effective annual rate of return considering compounding interest, used for standardized comparison of varying interest-rate arrangements into an annualized percentage number.

Compound Interest: The capability of a fixed deposit in India to generate interest, reinvested to produce further earnings.

Fixed Deposit Account: Deposits in India are held for a fixed period chosen by the depositor, are repayable on expiry, and typically offer comparatively higher interest rates based on the duration.

Future Value: The original amount plus compound interest, stated for a specific future date.

Joint Account: A Fixed Deposit account jointly owned by two or more individuals, with the option for transactions requiring signatures of all parties or allowing one party to act independently.

Know Your Customer (KYC): Norms introduced by the RBI for customer identification, aiding in fraud control, and identification of money laundering & suspicious activities. New depositors must provide photos, a copy of their PAN card, identification proof, and address proof.

Maturity Date: The date on which the principal amount of any debt instrument becomes due. It is repaid to the investor, which ceases interest payments.

Nomination: The designation of persons to receive the fixed deposit amount in case of the depositor's demise, made either in the FD application form or a separate form indicating the nominee's details.

Non-Resident Fixed Deposits: Deposits maintained by Indian nationals and persons of Indian origin residing abroad, foreign nationals, and foreign companies in India, with some companies accepting ordinary deposits in the names of private individuals via NRO Accounts.

NRO: A Non-Resident Ordinary account is often referred to as the NRI's Savings Account in an Indian bank. The interest earned on the account is taxable, while the principal and interest amount are non-repatriable. An Indian resident can be the joint account holder. 

Principal: The original amount invested.

Tax Deducted at Source (TDS): Deduction of tax by any person or institution making payments, including banks, with TDS deducted if the interest earned exceeds Rs. 5000 in a single branch. The bank files Form 16A annually detailing deductions made and deposited tax required for filing the individual's annual tax return.

FAQs

1. How to calculate fixed deposit interest?

Ans. When you invest INR 10,000 at 8% p.a. for 5 years, you earn a total (principal amount + interest amount) of INR 14,000, which is calculated in the following way:

• Step 1: 10,000 x 8 x 5 = INR 4,00,000.
• Step 2: Now divide INR 4,00,000 by 100. You get INR 4,000.

2. Is fixed deposit taxable?

Ans. The interest accrued from a Fixed Deposit is taxable and depends on the income tax bracket you belong to. Tax Deducted at Source (TDS) is applicable to the interest earned from FDs, and an additional surcharge or cess may also be levied.

3. Which bank has the highest interest rate on fixed deposits?

Ans. Axis Bank gives the highest interest rate on fixed deposits, approximately 5.75% - 7.00%.

4. Can we withdraw money from a fixed deposit before maturity?

Ans. Fixed deposits with a premature withdrawal feature enable depositors to terminate the account before its maturity date.

5. How to withdraw money from fixed deposit after maturity?

Ans. The steps to withdraw money from Fixed Deposit after maturity involve:

1. Visit the bank branch with your fixed deposit account. 
2. Submit your fixed deposit certificate to express your intent to withdraw funds upon maturity.
3. Complete a withdrawal form (FD maturity application) with required information and your signature.

6. Can I get monthly interest on fixed deposit?

Ans. You should choose the monthly interest payout option instead of the conventional cumulative option.

7. What is auto renewal in fixed deposit?

Ans. Auto-renewal is a service enabling investors to automatically renew their Fixed Deposits for the same duration as the initial deposit upon maturity.

8. Is FD 100% safe?

Ans. Fixed Deposits are deemed safe as they are backed by banks or financial institutions.

9. What is the minimum amount for FD?

Ans. The minimum investment amount required to open a Fixed Deposit account in a regular bank is Rs 5,000.  

10. How much FD is tax-free?

Ans. The threshold for TDS deduction on Fixed Deposits is Rs. 40,000, above which tax is deducted at source.

11. Is FD transferable?

Ans. No, a Fixed Deposit is a non-transferrable investment. You cannot switch banks once you have opened an account in a specific bank.

12. What happens when a fixed deposit holder dies before maturity?

Ans. If the first account holder passes away, the second holder receives the Fixed Deposit amount. Yet, if the second holder passes away, you can remove their name from the account and designate a new nominee.

13. What are the minimum and maximum deposit amounts for FDs?

Ans. You can open a 5-year tax saver Fixed Deposit with a minimum investment of Rs 100, in multiples thereof, up to a maximum of Rs 1.5 lakh.

14. What is an FD nomination?

Ans. A nominee is a person chosen to receive the benefits of the fixed deposit account in the event of the account holder's death.

15. What happens if I want to liquidate my FD before maturity?

Ans. Should you decide to prematurely withdraw your Fixed Deposit before its maturity, a penalty is imposed, typically ranging from 0.50% to 1.00% of the interest. The bank retains the authority to modify the penalty rate as deemed necessary.

16. Can I get a loan against my fixed deposit?

Ans. Loan against Fixed Deposit is a secured borrowing option enabling customers to use their FD accounts as collateral and obtain a loan in exchange.