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What are Certificates of Deposit?

Certificates of Deposit, or CDs for short, are a money market financial asset. Certificates of Deposit are governed by the Reserve Bank of India (RBI) regulations. A Bank CD acts as an agreement between you, the depositor and the bank whereby the bank pays you interest on a predetermined amount of money for a specific time period. This amount can be redeemed upon the expiry of this time period, but not before the tenure is up. 

People prefer to invest in bank CDs because the rates are often higher than what you would normally get on the funds in your savings account.

What are Fixed Deposits (FDs)?

Fixed Deposits are another type of financial instrument issued by banks. Fixed deposits are so popular because they are a very low-risk investment with a fixed rate of interest. Fixed deposits allow you to invest your surplus funds, even as low as ₹1000 in some banks, and earn a fixed rate of interest on the funds, for a specific period of time.

Certificates of Deposit Vs Fixed Deposits

On the face of it, both CDs and FDs sound similar. But the difference between certificate of deposit and fixed deposit is in the details. Here are the parameters to assess Certificates of Deposit Vs Fixed Deposits


Certificate of Deposit

Fixed Deposit


Short-term investment instruments up to 12 months that are subject to RBI regulations

Tenors can range from 7 days to 10 years, depending on specific banks

Minimum Amount

The minimum investment amount in the case of CDs is ₹1 lakh

For FDs, the minimum amount can be as low as ₹1000


Cannot be used to borrow money by pledging the CDs

Loans can be borrowed against an existing FD

deposit vs fd

Features of CD

Maturity Period

A bank CD is usually a  short-term investment, with a maturity period ranging from 7 days to 1 year. In the case of CDs issued by financial institutions, it ranges from 1 year to 3 years.

Minimum Amount

 In the case of a CD, the minimum amount required for investment is ₹1 lakh. Subsequently, investments are made in multiples of ₹1 lakh only. As of June 2021, the RBI has instructed that CDs shall be issued in a minimum denomination of ₹5 lakh, and thereafter in multiples of ₹5 lakh.

Governed by RBI

Only banks and financial institutions authorised by the RBI are allowed to issue a certificate of deposit. RBI also issues specific guidelines on the purchase of CDs.

Collateral for loan

The benefit of availing of a loan against your deposit is not applicable in the case of a Certificate of Deposit. Since they don’t have a lock-in period, banks don’t provide the facility of pledging them to secure a loan.

Features of FD

  • Assured Returns: Fixed deposits are the safest investment options as they provide you with guaranteed returns unlike market-led returns. You get the interest rates that were agreed upon at the time of opening your FD. 

  • Return on Investment: The FD returns are compounded periodically. You can select the period of your choice which is monthly, quarterly or annually. NBFCs provide higher returns than banks.

  • Higher Returns for Senior Citizens: Senior citizens are provided with a slightly higher interest rate than non-senior citizens

  • Flexible Tenure: You can choose the tenure of your choice. The tenure for FDs in India can range from 7 days to 10 years.

  • Loan Against FD: You can avail a loan against your fixed deposit. The interest rate of the loans vary from bank to bank. You can get 75% to 90% of your fixed deposit amount as loans.

  • Credit Card Against FD: Credit card can be availed against a FD. These types of credit cards are known as secured credit cards.The FD amount decides the credit limit of your credit card. So, the higher your FD amount, the higher will be your credit card limit.

  • TDS: As per the income tax act, 1961, tax on the interest income deducted at source. If your income is non taxable you can avoid TDS by using form 15G and 15H if you are a senior citizen.

  • Withdrawal: You can withdraw your FD amount after the maturity period. Some of the fixed deposits come with a lock-in period, during which withdrawals cannot be made. However, partial or full withdrawals can be made in a few financial institutions with penalty.

FD or CD: Which one to choose?

Your choice between a Certificate of Deposit Vs Fixed Deposits is defined by your end goal. If you like stability & predictability in your financial portfolio, you should consider Fixed Deposits. They come with a fixed rate of interest, for a specified period of time, and also allow you to avail of a loan to meet your fund crunch. The Bajaj Finance FD offered on Bajaj Markets offers a lucrative interest rate of up to 8.60%, with a flexible tenor and an easy online application process.

If you don’t mind a little risk to earn more returns, CDs will be a good fit. In fact, they’re a hassle-free way of investing in the short to medium term.


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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A Fixed deposit is a financial instrument that allows you to deposit a principal amount of money with your bank to earn a fixed, assured rate of interest on the funds. 

Yes, if you are a resident of India, you can invest in a CD.  

A certificate of deposit is a negotiable money market instrument issued by authorized banks and financial institutions, under the regulation of the RBI.

A Certificate of Deposit issued by the commercial banks is usually a short-term investment, with a maturity period ranging from 7 days to 1 year. In the case of CDs issued by financial institutions, it ranges from 1 year to 3 years

The main differences between a CD and an FD lie in their maturity tenure, the minimum amount needed to invest, and their use as collateral for a loan. 

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