Invest Safely in Fixed Deposit (FD) for Guaranteed Returns

A Fixed Deposit is an investment plan that helps you earn interest returns on idle savings. Your returns are predetermined and not affected by market fluctuations. Thus, it could help you diversify your portfolio.

You can invest in an FD for short-term or long-term goals. With the aid of our FD calculator , you could estimate the maturity amount in advance. Apply for an FD online on Bajaj Markets and earn guaranteed returns at attractive interest rates of up to 9.40% p.a. 

An FD investment requires you to deposit a lump sum amount for a specific timeline with a bank/NBFC. The tenor can vary between 7 days and 10 years, depending on the plan that you invest in.

Your earnings depend on three crucial parameters:

• Deposit  amount

• Chosen tenor

• Applicable interest rate

You can book a fixed deposit with a bank or a Non-banking Financial Institution (NBFC). Before investing, compare the interest rates offered by them. Then, the FD issuer will provide a fixed deposit receipt online or offline.  

This FD receipt contains the following particulars:

• Name and address

• Deposit amount

• FD account number

• Maturity amount and date

• Interest rate

• Nominee details

• Related terms and conditions

• Bank declaration

Issuers decide the FD interest rate based on the repo rate and internal policies. Your deposit amount and tenor also impact the rate you get. Usually, the longer you stay invested, the higher the rate and the better your earnings. Look out for special tenors offered by issuers. These may also offer higher FD interest rates.

While your FD remains locked for the duration, you could liquidate it before the tenor ends. But issuers levy a small penalty when you close your fixed deposit account before it matures.

A FD calculator is an online tool that lets you calculate the interest earnings and maturity value of an FD. All you need to do is enter the following parameters:

• Deposit amount

• Tenor or FD duration

• Applicable FD rate

This allows you to compare interest rates offered by various financial institutions, helping you select the right investment terms. In addition, the tool saves you time and effort that would otherwise be spent on intricate calculations.

Comparing interest rates is essential before choosing FD plans. See the table below to check the interest rates from banks/NBFCs/HFCs.

Disclaimer: The particulars mentioned are subject to change at the discretion of the issuer. These interest rates are valid as of 29th May 2024. 

Here's a table displaying some of the bank/NBFC FD interest rates offered on deposits less than ₹2 Crores.  

Disclaimer: The aforementioned particulars are subject to change at the discretion of the issuer. Kindly refer to the issuer’s website before booking an FD. These financial institutions are not partners of Bajaj Markets.

While comparing FDs based on rates and tenor options, learn the different FD types. Here is a brief overview of a few types you can invest in: 

• Cumulative FD

These FDs return the principal amount and interest earned at the end of the tenor. They are also referred to as ‘payout at maturity’. Your interest earnings are reinvested throughout the duration of the FD. Hence, the power of compounding comes into play, and you end up earning higher returns.

• Non-cumulative FD

Here, you can receive your interest at regular intervals. These could be monthly, quarterly, half-yearly, or annual payouts. Your total returns may be lesser when compared to cumulative FDs. This is because your interest earnings are not reinvested. This type of FD may be ideal if you are looking for a regular source of income.

• Regular FD

It is a standard FD offered by banks and NBFCs across the country. Invest a lump sum amount with an issuer of your choice for a specific tenor. You earn returns based on the predetermined FD interest rate.

• Corporate FD

This type of fixed deposit is also known as a company FD. They are offered by financial and non-financial banking companies. Before choosing your FD issuer, check their CRISIL and ICRA ratings. It helps ensure that you have invested your funds with a reliable and credible issuer.

• Post Office FD

Like banks and NBFCs, you can book an FD offered by the India Post for a specific tenor. These FDs are backed by the guarantee of the Indian Government. Hence, you can rest assured about the safety of this investment.

• Flexi FD

Flexi FD is a type of investment that is linked to a savings account and FD. Here, excess funds from your savings account are transferred to an FD. This allows you to earn higher interest rates. You can also withdraw funds whenever required. 

• Tax-saving FD

Investing in this fixed deposit scheme is ideal if you want to save on tax. A tax-saver FD has a mandatory lock-in duration of 5 years. It provides tax benefits on the principal/invested amount. This FD qualifies for a tax deduction of up to ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961. 

• Senior Citizen FD

This type has been specifically designed for senior investors above the age of 60 years. It functions the way a regular does. In this case, senior citizens are offered higher rates than the general public.  

Non-resident Indians (NRIs) can also benefit from competitive FD interest rates. Here two common types of FDs for NRIs: 

• Non-resident External (NRE) FD

This option may be ideal if you earn in foreign currency and plan to convert the earnings to Rupees. The interest you earn on this type of FD is tax-free. Also, the principal and interest amount is repatriable. 

• Non-resident Ordinary (NRO) FD

Unlike an NRE FD, the interest income you earn through this fixed deposit is taxable. Opening this account may be ideal if you do not intend to convert the amount. You can repatriate your interest earnings and the principal amount up to a certain limit. 

These accounts are not affected by exchange rate fluctuations. You can deposit funds either in foreign or Indian currency.

These fixed deposits offer unique benefits when compared to regular FDs. These advantages may be the eligibility criteria, tenor options, or deposit amount. Here is a quick rundown of a few essential points: 

• Issuers may offer special FD schemes for minors above the age of 10 years 

• Some FD may require you to deposit ₹1,000 to you kickstart your investment journey

• You may not have to pay penalty during premature withdrawal for select FDs

• You may enjoy higher FD rates when you opt for special tenors

• Certain issuers allow clubs, societies, firms, and organisations to book special term FDs

• These FDs are available for odd periods, such as 15 months, 45 days, etc.

For instance, if you book an FD with Bajaj Finance for a tenor of 42 months, you could enjoy a higher interest rate of up to 8.65% p.a.

While booking an FD, choosing the right tenor requires careful consideration. After all, the timeline you plan to stay invested for impacts your returns and liquidity. Here is an overview of key factors that differentiate a long-term and short-term FD.

Check out some vital features and compare them against other investment options. 

Fixed deposits could serve as attractive investment options when you capitalise on high interest rates from issuers. Choose an FD plan that helps you manage goals, such as:

• Meeting your child’s education costs

• Planning for your or your child’s wedding

• Making a down payment for your house

• Saving to purchase a vehicle

• Building a retirement corpus

• Creating a emergency fund to manage unforeseen situations

• Planning a vacation

Investing in FDs is ideal if you seek stability and safety. These are suitable investment options if:

• You are a risk-averse investor looking for a secure investment plan

• You seek predictable and stable returns

• You want to meet short-term goals, such as planning for a vacation

• You want to temporarily park funds to utilise them later

• You plan to diversify your investment portfolio

• You want to generate wealth over the long term by utilising the power of compounding

• You own a business and want to invest the surplus funds in a safe option

• You are a senior citizen or retiree looking for a regular income source

• You plan to meet your long-term goals, such as buying an asset

The below tips may help you choose the right FD:  

• Opt for the Right Investment Timeline

Choose an FD tenor based on your liquidity needs and financial goals. Remember, the interest rates vary with the FD duration. If you choose to stay invested for a longer period, you could earn higher returns. If you want to invest in an FD to meet short-term goals, choose one with a tenor of under 12 months. 

• Compare Interest Rates

Look for banks/NBFCs offering higher interest rates. This may help you to earn enhanced returns on your deposit. After all, the FD rate has a direct impact on your earnings. Utilise the senior citizen benefits of higher rates and invest funds in your parent’s name. 

• Check the Application Process

You can book an FD online without visiting a bank or NBFC. To begin investing, you may have to fill a form and transfer funds from your bank account to the FD account.

• Assess Premature Withdrawal Charges

These costs vary across issuers, so check them before choosing an FD. Note that a few issuers may waive these charges. So, consider these aspects before proceeding. 

If the issuer already has your Know Your Customer (KYC) details, there may be no need to submit ID and address proof. Complete the application form and fill in the details as requested by the issuer.

Existing Customers

As the issuer already has your Know Your Customer (KYC) details, there is no need to submit ID and address proof. Simply complete the application form and fill in additional details as requested by the issuer.

New Customers

• Latest passport-size photograph

• KYC documents (Aadhaar card/PAN card/voter ID/passport)

Companies/Business Entities

• PAN card on behalf of the firm

• Bank account statements

• Incorporation or company registration certificates

• KYC documents of authorised members

• Board resolution to book an FD account

• Partnership deed

• Articles of memorandum

• Copy of trust deed

Hindu Undivided Families

• PAN card of the entity head or Karta

• HUF declaration

• KYC documents

• Passport-size photograph of the head

Note that the exact requirements may vary depending on the issuer. Check with the bank or NBFC before booking your fixed deposit.

The process is relatively easy when you book an FD online, as it saves time and effort. On Bajaj Markets, you can open your account in just a few minutes. Here is what you need to do:

1. Click on the ‘INVEST NOW’ tab at the top of the page

2. Enter your mobile number, date of birth, and PIN code

3. Verify the OTP to continue the process

4. Browse the different FD issuer options available and choose one

5. Once you choose between bank or company deposit, enter the investment amount

6. Select the tenor and interest payout frequency

7. Enter your full name and PAN details

8. After KYC, provide must certain personal details

9. Add the nominee and bank details

10. Make the payment

Once your payment is successful, your fixed deposit account is booked. You may receive an email alert within 15 minutes.

To book an FD offline, follow these steps:

1. Visit the nearest branch of your FD issuer

2. Complete the FD application form

3. Submit the required KYC documents for verification

4. Transfer the funds from your savings account

The concerned representative will inform you once your FD is booked. Collect the Fixed Deposit Receipt (FDR) from the issuer.

You can renew or withdraw the invested FD amount based on your goals and preferences. In most cases, fixed deposits are automatically renewed for the same period and at the same interest rate. You can also renew your plan for better investment terms when the FD matures.

Here are some points to note:

• Withdraw your FD amount and the interest accrued once it matures

• You must provide standing instructions for auto-renewal 

• Renew your existing investment within 7 days before maturity if you want to change the terms

• Opt for auto-withdrawal to get the maturity proceeds credited to your savings account

• When you opt for a premature withdrawal, the penalty may go up to 1% of the interest

• Tax-saving FDs come with a mandatory lock-in period of 5 years

This option requires you to link an FD to a savings or current account. Here, the excess funds in your bank account will be transferred to the FD. This helps you improve liquidity, while earning higher interest.

If the balance in your bank account falls below the limit, a specified amount is transferred back. This is to help you meet regular expenses. 

Consider the following example to understand the concept better. Say you have ₹50,000 in your savings account and you have fixed ₹25,000 as threshold. Any amount exceeding this limit will be swept to your FD automatically.

In instances where your savings balance falls below ₹25,000, the same amount gets transferred back from the FD created most recently.  

Here are a few benefits of this facility:

• Ideal for small businesses who do not want to apply for an overdraft against their FD

• Easy to withdraw the exact sum you need without having to pay a penalty

• Earn higher interest than what you get to earn in a savings or current account

• You only lose interest on the money debited from the sweep-in FD; you can continue to earn the same interest

The interest earned from an FD is taxable. Though this may not be the case for certain types of FDs. Check out a few essential facts related to tax implication:

• Issuers cut Tax Deducted at Source (TDS) when crediting the interest to your account

• TDS is deducted if the interest crosses the threshold of ₹40,000 in a financial year

• TDS is only applicable to senior citizen FDs if the interest exceeds ₹50,000 in a fiscal

• 10% TDS may be deducted on your interest earnings; this could be 20% if you fail to furnish PAN details

• No TDS is deducted if your total income is below the minimum taxable amount

• Senior citizens can submit Form 15H to avoid TDS deductions

• Non-senior citizens must submit Form 15G

While FDs offer secure and guaranteed returns, there are certain risks involved. Factor in the below risks and limitations to avoid unpleasant surprises.

• Check the issuer's credit rating to gauge the risk of defaulting on interest payments

• Evaluate the inflation risk, as it could erode the value of your FD returns over time

• Analyse whether the FD interest earned in a financial year exceeds the limit to avoid TDS

• Choose a tenor that aligns with your financial goals and liquidity needs 

When booking an FD, consider your risk appetite, returns, time horizon, and goals. Compare different issuers on Bajaj Markets and calculate your earnings beforehand using an FD calculator. This helps you zero in on the best plan that allows you to accumulate a sizeable corpus over time.