FD (Fixed Deposit)

Bajaj Finance		PNB Housing Finance		Mahindra Finance
Tenor (in months)	Interest rates (in p.a.)	Tenor (in months)	Interest rates (in p.a.)	Tenor (in months)	Interest rates (in p.a.)
12-14	7.40%	12-23	7.35%	12	7.40%
15-23	7.50%	24-35	7.00%	24	7.60%
24	7.55%	36-47	7.70%	36	7.70%
25-35	7.35%	48-59	7.40%	48	7.75%
36-60	8.05%	60-71	7.50%	60	7.75%
61-84	-	72-84	7.40%	61-84	-
120	-	120	7.40%	120	-

Interest Rates For Senior Citizens 

How to Invest in a Fixed Deposit

Starting a fixed deposit is a financial decision that requires some forethought. Here’s how you can begin saving with an FD:

• Compare Prevailing FD Rates

Before making any saving decision, compare the prevailing interest rates offered by major banks and NBFCs. This ensures you are well informed about existing rates of interest for FDs. This also ensures that you are able to choose an FD that maximises your returns.

• Choose Preferred Tenor

Another important step is to determine your preferred investment horizon. This depends on your financial priorities. Broadly speaking, for short-term saving goals, you should choose a short-term fixed deposit.

 

However, if you are in it for the long haul, consider choosing long-term FDs. They are a great option to grow your wealth in a risk-free way. 

• Choose Preferred Payout Frequency

Depending on your financial needs and goals, you can choose between a cumulative and non-cumulative fixed deposit. When you save with a cumulative FD, your interest is compounded. Both the interest and the capital amount are paid out at maturity. 

 

However, with non-cumulative FDs, the interest earned on your deposit is paid out at regular intervals as specified by you.

• Choose Mode of Deposit

With the rise in online FDs, booking an FD has never been easier. On the Bajaj Markets website or app, you can compare multiple FD options and book an FD with ease.

 

Alternatively, you can choose to visit the nearest branch of an FD issuer and book an FD in person.

 

Understanding what is a fixed deposit account and why it helps diversify your portfolio can help you select the right investment horizon and issuer. So, ensure that you acquaint yourself with the required information before you book an FD. 

Documents Required to Open an FD Account

While you are now clear about what is a fixed deposit, it is essential to know about FD documentation. To open an FD account, you need to submit address and identity proof. Issuers use these to ascertain your credibility.

 

The list of documents needed vary based on the category you fall into. Here are the documents required for opening a fixed deposit account if you are an individual:

Identity Proof Documents 

• Voter ID 

• PAN card

• Driving licence 

• Passport

• Aadhaar card 

• Ration card 

• Latest passport size photograph 

• Senior Citizen ID card

Address Proof Documents 

• Electricity bill 

• Passport

• Telephone bill 

• Bank statement with a cheque 

• Post Office issued certificate or ID card

• Other utility bills 

Documents Required for a Public/Private Limited Company to Invest in an FD

If you are a Public/Private Limited Company, you will need to provide the following FD documents to invest in an FD:   

 

• Certificate of Registration 

• Resolution from the power of attorney and the Board of Directors 

• Certificate of Incorporation 

• Company Permanent Account Number

• Memorandum and Articles of Association

• Address and identity proof of the authorised signatories

• Specimen signatures of the authorised individuals

• Statement of bank account 

• Recent electricity/telephone bill

Documents Required for a Partnership Firm to Invest in an FD 

If you are a Partnership Firm, you will have to submit the FD documents mentioned below to invest in an FD: 

 

• Deed of Partnership 

• PAN Card

• Certificate of Registration 

• Identity and address proof of the authorised signatories 

• List of the authorised signatories

Documents Required for a Hindu Undivided Family (HUF) to Book an FD 

If you are a Hindu Undivided Family (HUF), you will need to submit the documents for fixed deposit as mentioned below:   

 

• Deed and Declaration of the HUF

• Address and identity proof of the Karta of the HUF

• PAN Card

• Bank statement of the HUF

Documents Required for a Statutory Body/Local Authority to Invest in an FD

If you are a statutory body or a local authority, you can invest in an FD by submitting the following documents:  

 

• PAN Card 

• Latest electricity/telephone bill 

• Bank account statement 

• Certificate of Incorporation 

• KYC of the authorised signatories 

• Certificate of Registration

• Copy of the permission letter from the respective ministry or government authority 

Documents Required for Registered Societies to Book an FD

If you are a registered society, you can book an FD by submitting the documents mentioned below: 

 

• PAN Card

• Recent telephone or electricity bill 

• Statement of bank account

• Memorandum and Articles of Association 

• Copy of the by-laws of the society 

• Copy of Resolution from the Board of Directors for the authorisation of the FD account

• Certificate of Incorporation/ Registration

• Address and Identity proof of the authorised signatories 

• Specimen signatures of the authorised individuals

Important Things to Note While Submitting Documents to Book an FD 

Be mindful about certain aspects when you submit your FD documents. Here are a few pointers:

 

• You must always submit original documents along with their photocopies for verification

• If you fill out the application form offline, make sure to always write in capital letters and use a black pen

• Always remember to countersign if you overwrite

• Utilise the nomination facility provided

• Provide your permanent address as well as your contact number

Key Things to Consider When Choosing a Fixed Deposit

It is imperative that you factor in your finances, goals and other factors while making any savings decision. Here are some important factors to consider before booking a fixed deposit.

1. Risk Appetite

Before making an investment, consider your risk tolerance levels. Your risk appetite is unique to you and your financial goals. 

 

A fixed deposit is a great financial instrument as it holds negligible risk and offers guaranteed returns. This makes it ideal for all kinds of investors.

2. Time Horizon

Starting an FD account is ideal for both long-term and short-term investors as FD tenors can range anywhere from 7 days to 10 years. 

 

FDs are a great choice if you are looking to grow your money in a stable and steady manner for a long time. They offer guaranteed returns even if you want to park your excess funds on a short-term basis.

3. Assured Returns

Interest rates on fixed deposits are predetermined and paid out as specified by you. This makes them an investment option you can rely on. 

 

If you are worried about economic downturns chipping away at your hard-earned money, FDs are a great savings option. This is because an FD is not affected by market fluctuations. So, you get the rate of return that you were assured of at the time of booking.

4. Financial Goals

If you require your invested capital in the immediate future, consider short-term FDs. They are an ideal way to park your funds safely while also generating assured returns. 

 

If you do not have an immediate need for the invested amount, consider long-term FDs. They will generate higher rates of return while keeping your investment safe. 

 

If you require a regular source of income, consider investing in non-cumulative fixed deposits. They will give you interest payouts at a frequency you choose. Otherwise, consider a cumulative fixed deposit that will help you maximise your payout.

5. Safety of Capital

If your primary goal is to preserve your savings, then a fixed deposit may be the ideal option for you. When you save with an FD, your money grows at predetermined rates of return. This ensures both your capital and returns are safe. 

 

Additionally, FDs are not subject to market fluctuations, which means your savings are safe regardless of market conditions.

How Does a Fixed Deposit Work?

While it is crucial to understand what a fixed deposit is, it is equally essential to be aware of how a fixed deposit works. Booking an FD allows you to park your funds with the financial institution. The bank/NBFC promises to return your invested funds once the FD tenor is complete. 

 

After the end of your FD tenor, also known as maturity period, you get the principal amount and the interest earned, collectively known as the maturity amount. The money you park with financial institutions is either used to offer loans to other borrowers or used by companies for their operations.

 

In either case, you receive interest income for your deposited amount. This interest you earn is based on the issuer and on the FD tenor. Usually, the longer the tenor, the higher will be your interest earnings. 

 

For instance, investing in an FD for 30 days may provide lower interest rates than a tenor of 5 years. However, also remember that FD providers have special tenures that offer higher rates of interest. Investing for these durations can help you amplify your earnings. 

 

By choosing a cumulative FD, you are essentially reinvesting the interest and enjoy the power of compounding. However, in this case, you receive the earnings only when your fixed deposit matures. Another option is to receive the interest periodically with a non-cumulative FD. 

Conclusion

Now that you know what an FD is, its features and how it works, choose an issuer offering you competitive interest rates. This can help you maximise returns and generate wealth. Check out attractive interest rates from top issuers on Bajaj Markets.