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IndianMoney Complaints - If You Are Cheated In Fixed Deposit Fraud Research Team | Posted On Friday, November 30,2018, 06:48 PM

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IndianMoney Complaints - If You Are Cheated In Fixed Deposit Fraud



What is fixed deposit?

fixed deposit is an investment offered by banks and NBFCs, where a person can deposit money and earn higher interest than savings bank accounts. The money can be deposited for a specific period ranging from 7 days to 10 years. Once the money is invested with the bank or NBFC, it starts earning interest based on the duration of the deposit. Usually, the amount deposited in the fixed deposit cannot be withdrawn before maturity, but you may withdraw early after paying a penalty.

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Types of Fixed Deposit:

To suit the investment requirements of customers, banks and NBFCs offer different types of fixed deposits:

Regular fixed deposits:  

  • This is a type of FD where the money is invested for fixed tenure, ranging from a week to 10 years.
  • The rate of interest is pre-determined, but higher than the savings bank account.

See Also: Post Complaint On IndianMoney If NBFC Cheats You

Tax saver fixed deposit:

  • Tax saver FD enjoys Section 80C benefits up to Rs 1.5 Lakhs a year.
  • The investment is locked for a period of five years and funds can’t be withdrawn before the maturity date.

Senior citizen fixed deposit:

This FD scheme is for people above the age of 60 years, who earn an additional interest rate of 0.5%.

Risk of fixed deposit:

Bank Fixed Deposits (FDs) are generally safe investments because FD amounts up to Rs 1 Lakh per bank per branch are insured under the Deposit Insurance and Credit Guarantee Scheme of India. Fixed deposit interest rates are higher than SB account rates. Fixed deposits offer complete flexibility with regard to the tenure of investment. The term of fixed deposits can vary between 7 days to 10 years.

The biggest risk that fixed deposits face is the returns may be lower than inflation and reinvestment risk where the proceeds from the payment of Principal and Interest have to be reinvested at lower rates.

Fixed Deposit Fraud:

Fixed deposits are popular among the masses as they are safe investment avenues. However, there are certain points you must keep in mind before investing in fixed deposits:

  • Company FDs are risky: Company FDs are a tempting investment as they offer high rates of interest, vis-à-vis banks or NBFCs. The chances of default are significantly higher than bank FDs. You need to check rating and invest in AAA rated Company FDs.
  • TDS deduction: You must be careful on the deduction of TDS on the deposit. In the case of company fixed deposit, TDS is deducted if your interest income crosses Rs 5000 a year, but in the case of a bank fixed deposit, TDS is only deducted after interest income crosses Rs 10,000 a year (Rs 50,000 in case of senior citizens). Do not get cheated by higher TDS deduction.
  • Check the background of the company: Do thorough back ground checks before you invest money in a company FD. Do a thorough research on the company’s past performance, management, customer service and financials. Company FDs are unsecured and bear a higher risk than bank FDs. You might end up losing money if the company runs into losses.

See Also: IndianMoney Review : File Complaint Against Employer For Maternity Benefits

How safe are fixed deposits in nationalized banks?

The banks offer lower rates of interest on fixed deposits as compared to company fixed deposits. In times of inflation, returns from bank fixed deposits may eventually turn out to be low. But, as an investor if your concern is safety of investment, then you must go for bank deposits. There is no risk in keeping money in fixed deposits at Nationalized Banks in India. The Government of India is a major shareholder at all Nationalized Banks and these banks are monitored and controlled by the RBI.

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