A term deposit is a secure, low-risk investment option to maximise earnings. Also known as a fixed deposit (FD), this helps you grow your funds over a chosen period. This is an investment avenue with a popular standing in the market.
When you open a term deposit account, you deposit a certain amount for a fixed tenor at a predetermined interest rate. This way, you earn interest on the amount invested.
Apart from this, certain banks also provide insurance on deposits. As per the RBI, you get coverage up to ₹5 Lakhs, which includes the principal amount and interest earned. As such, term deposits are an excellent way to earn secured returns without the risk of market volatility.
Here’s a brief overview of their features and benefits.
Term deposit interest rates in India are determined by various factors, such as the deposit duration, the amount invested, and the type of deposit. From an earnings POV, the longer you stay invested, the higher your returns.
While the investment amount plays a crucial factor in maximising your income earnings, know that the type of fixed deposit is also critical. When you opt for a payout at maturity, your returns are higher due to higher FD rates.
Likewise, FD rates may be slightly lower if you choose to get your interest paid to you periodically. This is because the issuer offers lower rates for non-cumulative FDs, and the power of compounding is best experienced with cumulative FDs.
Hence, your term deposit interest rates vary depending on the factors mentioned above. Ideally, you should book a long-tenor FD with a payout at maturity to enjoy higher interest rates.
Additionally, some financial institutions may offer higher rates on special tenors. Consider these factors and choose a lender offering attractive interest rates.
The term deposit scheme has a pre-set lock-in period, which means that your funds are locked in for a set amount of time. After this period, you can withdraw your funds prematurely, albeit at a cost.
The interest rate is one of the key factors that decide your returns. The higher the interest rate, the higher your returns. With issuers across the market offering competitive FD rates, selecting a particular financial institution may be difficult.
For some of the best offers, invest on Bajaj Markets. The digitised platform allows you to compare term deposit interest rates across issuers, and invest online with ease. Here are the FD rates on offer from partner issuers.
Issuer |
FD Rates (% p.a.) |
Bajaj Finance |
8.35% |
PNB Housing |
7.50% |
Mahindra Finance |
7.75% |
AU Small Finance Bank |
8.00% |
YES Bank |
7.75% |
Issuer |
FD Rates (% p.a.) |
Bajaj Finance |
8.60% |
PNB Housing |
7.75% |
Mahindra Finance |
8.00% |
AU Small Finance Bank |
8.50% |
YES Bank |
8.25% |
Disclaimer: These fixed deposit interest rates are subject to change as per the issuer’s internal policies.
Closing a term deposit account is a simple process. Here is the process to close the account:
Check the terms and conditions of the term deposit to determine if there are any penalties for early withdrawal
Notify the issuer when you plan to close your FD
Provide the FD details to the bank
Sign the withdrawal form
Receive the funds
Alternatively, you may also visit the issuer’s website and close your term deposit online.
Term deposits are a source of funding for banks where you deposit a fixed amount of money for a specific period at a fixed interest rate. The bank uses these deposits to fund its lending activities and earn interest.
In return, you receive a fixed interest rate on your deposit at regular intervals or maturity, depending on the type of FD you choose.
Now that you are familiar with the features and types of term deposits, compare FD schemes across issuers before investing in a specific plan. Choose attractive FD rates and accumulate wealth passively over a specified period. To invest with some of the top issuers in India, visit Bajaj Markets.
A term deposit, or fixed deposit (FD), is an investment option offered by banks and other financial institutions in India. You can deposit a lump sum with a bank or financial institution for a specific period ranging from a few months to several years.
The financial institution pays you a fixed interest rate on the deposit, which remains constant throughout the tenor of the deposit. At the end of the term, you receive your initial deposit amount and the interest earned.
The minimum amount required to invest in a term deposit in India varies from bank to bank. Most banks have a minimum deposit requirement of around ₹1,000, while a few others insist on a minimum amount of ₹10,000.
Yes, you can withdraw your money from a term deposit before maturity. However, you may be subject to penalties, which can vary depending on the financial institution. Most issuers levy 0.5%-1% penalty for premature withdrawals.
Yes, you can reinvest your term deposit once it matures. Most financial institutions offer an option to renew your deposit for another term at the prevailing interest rate.
Interest income from Fixed Deposits is fully taxable. You can add it to your total income and get taxed at slab rates applicable to your total income. You can then see it under the head ‘Income from Other Sources’ in your Income Tax Return.
Foreclosure charges : No additional charges though customer has to be pay the interest applicable on the outstanding amount
Disbursal Time: 5 days