Fixed Income

One of the quite popular investment schemes for individuals is the Fixed Deposits which is offered by the Indian Banks where one can invest money and get higher interest rates in comparison to a regular savings account, until the given maturity date. In order to avail the benefits of an FD one may or may not need to open a separate account. Besides the regular investment benefits the FDs also offer income tax and wealth tax benefits.

Some Benefits of Fixed Income:

• One can get loans up to 80 to 90% value against the FD. And the rate of interest charged on the loan is generally 1 to 2% over in comparison to the rate offered on the FDs.
• Citizens of India can open these accounts for a minimum duration of 3 months.

Minimum amount required:

• Rs.10,000/- for FDR in Metro and Urban Branches and Rs.5,000/- in Rural and Semi urban branches, and for senior citizens the minimum amount is Rs. 5000/-
• Minimum Amount criteria are not applicable to Subsidies that are kept under GOVT Sponsored Schemes, Margin Money, earnest money and court attached/ordered deposits.

Generally the Interest are paid on quarterly basis and in case the date of interest payments falls on any holiday then the amount will be deposited on the next working day. The depositor may ask for the repayment of their deposits before maturity. This can be done on the basis of the directives issued by the Reserve Bank of India from time to time. In terms of the directives, the provision regarding premature withdrawal of deposits is as follows:

• In the event of the FDR being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank, with premature closure penalty.

Senior citizens are offered additional interest of 0.50 % for deposits placed for 1 year and above period.