Fixed Deposit

Fixed Deposit, also known as a ‘time/term deposit’, is one of the most popular investment options in India. This investment instrument allows the depositor to invest their savings for a fixed period of time and earn returns on it at a fixed rate of interest which is determined at the commencement of the scheme. The time period for which the money is locked in the FD is called a tenure. Since it’s a fixed deposit, there are two things that are locked – the rate of interest and the tenure.

Fixed deposits are offered by scheduled commercial banks (e.g. SBI, HDFC Bank), small finance banks (e.g. Jana SFB) and non-banking financial institutions (e.g. ICICI Home Finance). 

Along with offering guaranteed and stable returns, investing in an FD also helps save income tax. The amount deposited in an FD (up to Rs 1.5 lakhs each financial year) is exempt from income tax as per the provisions in Section 80C of IT Act, 1961. 

Usually senior citizens and in some cases, super senior citizens get preferential rates of up to 1% (approx.). Other facilities include loan against FD, premature withdrawal and partial withdrawal etc.