Fixed Deposits: Interest Rates & Benefits

Fixed Deposits

Fixed deposits or FD’s for short is a popular form of investments in India. Fixed deposits as the name indicates is a type of investment in which the deposits is fixed for a fixed period of time and the depositor is being given a fixed rate of interest (generally fixed but sometimes it depends on the bank, which has been chosen by the depositor)on the amount that is being invested. Its a very popular and  considered one of the safest form of investment. Fixed deposits gives better returns than saving accounts and this returns depends on the time and amount being invested. Fixed deposits are offered by banks, NBFC’s (Non-Banking Financial institutions) and also by corporate   to raise money under Section 58 A. The FD’s offered by corporate are considered risky.

  1. Simple Fixed Deposits –The amount that is being earned as interest is being credited on the depositor’s savings bank account or the interest being earned is being sent as cheque to the depositor.
  2. Cumulative Fixed Deposits – The amount that is being earned as interest is being reinvested into the FD account.

Advantages of Fixed Deposits

Safety

The FD’s offered by the reputed banks in India are safe  as the y are being regulated by the RBI.

Regular income

A fixed deposit generally earns a regular rate of interest for a fixed period of time and this may serve as a regular source of income especially for the retirees.

LIQUIDITY

Fixed deposits also offer liquidity as these FD’s can be closed and one can withdraw the amount. But this feature may depend on the bank from which the FD was being taken. Moreover one can also take a loan on a fixed deposit and banks generally lends 90 % of the principal as fixed deposit.

Tax benefit

FD’s  which have a tenure of 5 year are eligible for a tax benefit under Section 80 C of IT Act,1961 and the amount is limited to a minimum of Rs 100 and to a maximum of Rs 1 lac.

Some banks in india offering fixed deposits and their Rate of interest

SBI - Deposits below 1 crore


Duration

 

       Rate of interest in %

7 days to 90 days

6.50

 
91 days to 179 days

6.50

 
180 days

6.50

 
181 days to 240 days

6.50

 
241 days to less than 1 year

6.50

 
1 year to less than 2 years

8.75

 
2 years to less than 3 years

8.75

 
3 years to less than 5 years

8.75

 
5 years and up to 10 years

8.75

 

For senior cititizens SBI offers  a premium of 0.25% for deposits over a year.

Axis bank

INTEREST RATES ON TAX SAVER DEPOSITS

5 years only (Amount Capped at Rs. 1 lac  per customer per Financial Year) INTEREST RATES(%) (p.a.)
Regular Depositor (Individual & HUF)

9.00

Senior Citizen (Individual)

9.75

 

Yes Bank

Tenure

Interest Rate  (% p.a) w.e.f 1st April 2013

For deposit less than INR 1 Crore

Regular

Senior Citizen

 7 to 45 days 5.00% 5.75%
 46 to 90 days 6.25% 7.00%
 3 months to < 6 months 8.00% 8.75%
 6 months to < 9 months* 8.25% 9.00%
 9 months to < 1 Year 8.75% 9.50%
 1 Year to < 3 Years * 9.00% 9.75%
 3 Years to <= 10 Years 8.75% 9.50%
*Special Rates
271 days

8.75%

9.50%

15 Months 15 Days to 16 Months

9.25%

10.00%

      Bank of india

Maturity

For deposits less than Rs.1 Cr

Existing w.e.f. 01.04.13

Revised Rate w.e.f.
02.04.13
(No Change)

07 days to 14 days *

4.00

4.00

15 days to 30 days

4.50

4.50

31 days to 45 days

6.50

6.50

46 days to 90 days

6.75

6.75

91 days to 179 days

7.00

7.00

180 days to 269 days

8.00

8.00

270 days to 364 days

8.00

8.00

1 Year to less than 2 Years

9.00

9.00

2 Years to less than 3 Years

9.00

9.00

3 Years to less than 5 years

9.00

9.00

5 years to less than 8 years

9.00

9.00

8 years and above up to 10 Years

8.75

8.75

* Minimum Deposit Rs.1 Lac

From the above listed banks it can be concluded that for a shorter period of time  Yes Bank offers a better rate of interest (in 271 days its paying 9.75% and 15-16 months its paying 10%).

 HDFC  Bank -     Deposits below 1 crore

Period

Interest Rate (per annum)

**Senior Citizen Rates (per annum)

7 – 14 days

3.50%

4.00%

15 – 29 days

4.00%

4.50%

30 – 45 days

5.00%

5.50%

46 – 60 days

7.50%

8.00%

61 – 90 days

7.50%

8.00%

91 Days to less than 6 months 1 day

7.50%

8.00%

6 months 1 day – 6 months 15 days

8.00%

8.50%

6 months 16 days

8.00%

8.50%

6 months 17 days – 9 months 15 days

8.00%

8.50%

9 months 16 days

8.00%

8.50%

9 months 17 days – 1 year

8.00%

8.50%

1 year 1 day – 1 year 15 days

8.75%

9.25%

1 year 16 days

8.75%

9.25%

1 year 17 days – 2 years

8.75%

9.25%

2 years 1 day – 2 years 15 days

8.75%

9.25%

2 years 16 days

8.75%

9.25%

2 years 17 days – 3 years

8.75%

9.25%

3 years 1 day – 5 years

8.75%

9.25%

5 years 1 day – 8 years

8.25%

8.75%

8 Year 1 Day – 10 Years

8.25%

8.75%