Term Deposit/Fixed Deposit

Fixed Deposit:- Fixed deposit is the most used and popular financial instrument for savings in India. Fixed deposit is the financial instrument provided by bank/housing finance company/non banking financial company/post office. In this instrument investor deposit a certain amount of money with bank/ HFC/ NBFC/PO for certain period and these entities pays interest on deposited amount for the deposited period. It provides investors with high rate of interest as compare to regular or normal saving account till maturity date. The tenure of an FD can vary from 7 days as minimum and can be as high as 10 years. The interest rate varies depending on bank/HFC/NBFC/PO, tenor, amount, depositor’s status (individual, HUF, Company, Trust etc.) , scheme etc. It may be require to open a separate account for deposited amount as per bank/ housing finance company/ non banking financial company policy.  Fixed deposit is also known as Time deposit or Term deposit in India. Its acronym is FD/TD.


Benefits of Fixed Deposit:-

  • Guaranteed returns.
  • Pre-maturity option available.
  • Encourage habit of Saving.
  • Higher Interest rate.
  • Loan against deposit.
  • Secured Investment.
  • Flexible Interest payout options.
  • Flexible tenor options.
  • Lots of option available to Invest with (Banks, HFC, NBFC, PO).
  • TDS option available.
  • Re-investment or Renewal facility available.
  • Nominee facility available.
  • Re-investment or Renewal facility available.
  • Tax Saving Fixed deposit also available.


 Fixed deposit receiver in India:- There are four main places where depositors/investors can park their funds in FD/TD. These are:-


To know more about deposit click on the below mentioned links or visit pages individually published under Term Deposit/ Fixed deposits.

  1. Deposit through Banks
  2. Deposit through Housing Finance Company (HFC)
  3. Deposit through Non Housing Financial Companies (NBFC)
  4. Deposit through Post offices


Features of Banks fixed deposits:- (in this topic we are covering only unique features of deposit in the bank in comparison to deposit in HFC or NBFC or PO.)

  1. TDS applicability
  2. Secured Investment
  3. Tax saving deposit


To know Fixed deposit/Term deposit let us understand this through below mentioned example :-

Aashu Bhardwaj & Nisha Bhardwaj deposited 20,000/- on 07th March 2016 with State Bank of India for 5 years on 9% p.a ROI cumulative quarterly having maturity value of Rs. 31,210/- and maturity date  is 07th March 2021.


In above example:-

Bank/HFC/NBFC/PO is State Bank of India (Bank)

Depositors/Investors are Aashu Bhardwaj (Applicant or First Applicant) & Nisha Bhardwaj (Co-applicant or 2nd applicant)

Principal Amount is Rs. 20,000/-

Effective deposit date is 07th March 2016.

Tenor/Deposit Period is 5 Years or 60 months.

Rate of Interest (ROI) is 9%

Deposit Scheme is Cumulative.

Compounding of Interest happen quaterly

Maturity date is 07th March 2021.

Maturity Value is Rs. 31,210/-

Interest Amount is 11,210/- till maturity.(Principal – Maturity Value)


To understand above mentioned example of Fixed/Term/Time deposit we need to know in detail about above used terms:

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