Fixed deposits (FDs) are one of the traditional investment options. Most risk-averse investors prefer investing in FD. We have covered the following in this article:
RBI has announced a new rule applicable to unclaimed, matured FD accounts. That is the funds in an unclaimed, matured FD account will attract an interest rate as applicable to the savings account or the contracted rate of the matured FD, whichever is lower.
Fixed deposits are an investment instrument provided by banks and other financial institutions such as non-banking financial institutions (NBFCs) and housing finance companies (HFCs). Under this, investors would deposit a lump sum over a period. In turn, they would get a fixed rate of interest throughout the investment. The rate of interest provided on FDs is much higher than that of a regular savings bank account. Once the tenure of the deposit ends, investors can withdraw their investment. However, they have a choice of reinvesting their money for another term.
All scheduled commercial banks and some NBFCs and HFCs in India offer fixed deposits. However, if investors are to invest in FDs provided by an NBFC or HFC, then they first need to check the ratings provided by agencies such as CRISIL. This is to make sure that your money is safe. Private sector banks and other financial institutions may offer a slightly higher rate of interest than the public sector banks.
The following are the key features of fixed deposits:
Fixed deposits can be opened both online and offline: Online:
Fixed deposits are an excellent investment vehicle for those investors who don’t want to bear any risk. Longer the tenure more the returns accumulated as the compounding phenomenon powers them. FDs are flexible as investors can prematurely withdraw partial or full amount invested.