It is a saving scheme offered by banks and non banking financial companies popularly called NBFCs. These are a type of term deposits that give a fixed rate of interest until maturity. The rate of interest is higher than savings bank account. Interest rates vary across banks. Fixed deposits offer saving and investing opportunity at a single place with no risk involved.
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See Also: Fixed deposit interest rate
Loan against FD is a major benefit of fixed deposits. It is a secured loan, where the FD is pledged as security. The amount availed varies depending on the FD amount. It can range from 90-95% of the FD amount. Interest rates on these loans are 1-2% higher than the interest rate on FD. Any FD holder can apply for loan except:
To calculate FD rates, the following formula is used:
A= Amount after maturity
P= Principal amount invested
R= Rate of interest
N= compounding frequency
T= time period of investment
Now,
A = P* (1+R%/N) ^ (N*T)
Let’s understand this better by taking an example. Consider the following figures:
P= Rs 1,00,000
R= 8%
T= 5 years
N=4, as the interest is compounded every 3 months.
Now,
A= 1,00,000 (1+0.08/4) ^ (4*5) = Rs 1,48,595.
There are certain factors which influence the interest rates. These are:
See Also: 7 Tips on How to Invest in High-Interest Fixed Deposits
FD interest rates across banks in India.
Name of Bank |
Tenure |
General citizens |
Senior Citizens |
State Bank of India |
7 days to 10 years |
5% to 6.8% |
5.5% to 7.3% |
HDFC bank |
7 days to 10 years |
3.5% to 7.3% |
4% to 7.8% |
ICICI bank |
7 days to 10 years |
4% to 7.1% |
4.5% to 7.6% |
Axis bank |
7 days to 10 years |
3.5% to 7.2% |
3.5% to 7.85% |
Canara bank |
7 days to 10 years |
5% to 6.5% |
5.5% to 7% |
IDFC bank |
7 days to 10 years |
4% to 8.5% |
4.5% to 9% |
Kotak Mahindra bank |
7 days to 10 years |
3.5% to 6.9% |
4% to 7.4% |
Bank of Baroda |
7 days to 10 years |
4.5% to 6.6% |
5% to 7.10% |
Punjab National bank |
7 days to 10 years |
5% to 6.75% |
5.5% to 7.25% |
Yes Bank |
7 days to 10 years |
5% to 7.25% |
5.5% to 7.75% |
Name of Bank |
Tenure |
General citizens |
Senior citizens |
Ujjivan small finance bank |
7 days to 10 years |
5% to 8.1% |
Additional 0.50% |
Jana small finance bank |
7 days to 10 years |
5% to 10% |
5.5% to 11.05% |
Equitas small finance bank |
7 days to 10 years |
5% to 8.25% |
Additional 0.60% |
AU small finance bank |
7 days to 10 years |
5.25% to 8% |
Additional 5.75% to 8.53% |
Fincare small finance bank |
7 days to 10 years |
4% to 9% |
4.5% to 9.5% |
ESAF small finance bank |
7 days to 10 years |
5.5% to 8% |
6% to 9.25% |
North east small finance bank |
7 days to 10 years |
4.75% to 8.5% |
5.25% to 9% |
This is a subsidiary of RBI launched for the purpose of ensuring guarantees against all bank deposits like saving, current and fixed recurring deposit. A maximum limit of Rs 5,00,000 against each deposit is ensured. DICGC plays a major role in creating trust factor in the minds of the depositors. All banks irrespective of their size are regulated by DICGC. It has the right to cancel a bank’s registration if it fails to make premium payments for three consecutive half yearly periods.
See Also: Should You Invest In FDs?
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