A fixed deposit (FD) is a kind of deposit account rendered by banks for a fixed period at a fixed interest rate. The money needs to be deposited only once while opening of account. At the end of the period, the interest amount is computed on the principal amount. The total sum along with the interest is paid to the depositor cumulatively. FDs or TDs (Term Deposits) are a low risk savings alternative which provides a fixed return. The duration varies from 7 days to 10 years. The rate of interest also changes according to the duration of the FD, total rates in the economy as well as the policy of the related bank.
Interest rates in 2019
Bank FD rate of 9.25% provides fair returns which is adequate to cover the inflation rate. A depositor has to be careful before picking FDs of non banks because these FDs carry market as well as credit risk. The degree of risk with non bank FDs is mirrored in the degree of credit ratings attributed to the FDs of NBFCs and HFCs.
Why pick FD?
FD renders a lot of features and benefits thereby making it the most popular investment alternatives accessible in India. Below-mentioned are some of the reasons of why one should choose fixed deposit:
- Sure returns on investment
FD earns every investor a fixed rate of return on their investments. The rate of interest applicable is what the bank commits to pay on the investments. This provides the investor a fixed rate of return on their savings as well as the safety of their investment. In addition there is no risk committed to the investments made.
- Flexible tenure alternatives
Normal fixed deposit also has the option of flexible which ranges from 7 days to 10 years. The rate of interest on these FDs also differs with different tenure alternatives. Though, tax-saver FDs are available merely for 5 years or 10 years fixed period.
- Investment amount
The minimum as well as maximum fixed deposit investment amount varies from bank to bank. Tax saver FDs has a maximum limit of Rs.1.5 lakh per annum.
- Higher returns
The rate of interest on fixed deposits is higher than that which the bank pays on other savings account. The rate of interest on FD varies from 3.5% to 9% per annum based on the bank, investors’ age as well as the tenure that one invests the money for.
All customers who have FD in banks get the facility of availing loan against their FD receipts. The rate of interest on these loans is normally 1-2% higher than FD interest rates but lesser than most other loans.
- Premature or part withdrawal
Banks allow the depositor to withdraw fixed deposit amount before its maturity by imposing a premature withdrawal penalty. The interest rates provided for premature withdrawal is normally lesser than the rate offered on maturity.
Just have a look at the present rate of interest on FDs of different banks as below in the chart:
FD rate of Interest
| Name of the Bank | Regular Customers (per annum) | Senior Citizens (per annum) |
| State Bank of India | 5.75% to 6.85% | 6.25% to 7.35% |
| Kotak Mahindra Bank | 3.50% to 6.66% | 4.00% to 7.19% |
| HDFC Bank | 3.50% to 6.50% | 4.00% to 7.00% |
| ICICI Bank | 4.00% to 7.00% | 4.50% to 7.50% |
| Bank of Baroda | 4.50% to 6.70% | 5.00% to 7.30% |
| Citibank | 3.00% to 6.52% | 3.50% to 7.11% |
| Axis Bank | 3.50% to 7.25% | 3.50% to 7.75% |
| Karnataka Bank | 3.50% to 6.50% | 4.00% to 7.00% |
| Yes Bank | 5.00% to 7.25% | 5.50% to 7.75% |
| Punjab National Bank | 5.75% to 6.25% | 6.25% to 6.75% |
| IndusInd Bank | 4.50% to 7.25% | 5.00% to 7.75% |
| Canara Bank | 5.75% to 6.00% | 6.25% to 6.50% |
| Deutsche Bank | 4.25% to 8.25% | 4.25% to 8.25% |
| Bank of Maharashtra | 4.25% to 6.50% | 4.75% to 7.00% |
| IDFC Bank | 4.00% to 7.25% | 4.50% to 7.75% |
| RBL Bank | 5.00% to 7.20% | 5.50% to 7.70% |
| DCB Bank | 4.00% to 7.25% | 4.50% to 7.75% |
| IBDI Bank | 5.75% to 6.25% | 6.25% to 6.75% |
| DBS Bank | 4.00% to 7.00% | 4.00% to 7.00% |
| Andhra Bank | 4.00% to 6.50% | 4.50% to 6.50% |
| South India Bank | 4.00% to 7.00% | 4.50% to 7.50% |