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Fixed Deposit Advisor in Chennai - FD, RD, Time Deposits & Tax Saver Deposit

What is a fixed Deposit?

An investing tool that banks and non-banking financial institutions (NBFC) offer to their clients to help them save money is called as fixed deposit, or FD. With an FD account, you can invest a sizable sum of money for a set amount of time at a predefined rate of interest. You receive the lump payment and interest at the conclusion of the term, which is a wise financial strategy. For a fixed deposit account, banks provide a variety of interest rates.
You can select a fixed deposit for a duration of no less than 7 days and no more than 10 years. For this reason, an FD is sometimes referred to as a term deposit. If you open a fixed deposit account with a certain interest rate, it is assured because, regardless of any changes brought on by market volatility, the interest rate stays the same.
Depending on your preference, you may get your interest either at maturity or on a regular basis. You cannot take the money out before the maturity date. You are required to pay a fine if you choose to.
Knowing a fixed deposit's key characteristics is necessary to understand it clearly. The important ones are listed below:

Features of Fixed Deposits

1. Guaranteed Returns

A fixed deposit has assured returns. The return that was agreed upon when you opened your FD will be given to you. This is not the case with market-led investments, which provide returns based on changes in market interest rates. Even if interest rates decline, you will still be paid the agreed-upon interest rate. The fixed deposit is thus more secure than any other form of investing.

2. Amount of Interest

Your chosen tenure and principal amount will determine which rate of interest is better given. Typically, the interest rates for long-term FDs are greater while those for short-term FDs are lower.

3. Flexible Tenure and Renewal

FDs with flexible duration and renewal options can be employed for tenures ranging from one week to ten years. When you open the FD, you can select the chosen term. On maturity, you can renew the FD just as easily, but be sure to check the interest rates first because they might change.

4. IRS Tax Deduction

The Income Tax Act of 1961 permits a tax deduction for interest generated on the principal sum. When you file your taxes, you can include FD interest income in the "other income sources" category.

Fixed Deposit Advantages

Understanding fixed deposits' advantages is equally important as understanding their definition.
1.   The rewards on fixed deposits are reliable and secure.
2.   The principal amount invested is completely safe.
3.   You have two options for receiving interest:
v  you can choose to do so on a regular basis (monthly or quarterly),
v  you can choose the cumulative method, in which case you will receive the full amount at maturity.
4.   Fixed Deposit returns are secure from market volatility.
5.   The majority of banks offer fixed deposit interest rates that are 0.5 percent higher for senior folks.
6.   In case you require more funding, you can also choose to apply for a top-up loan against your fixed deposit.

Types of fixed Deposit Account

Common FDs

A present time, ranging from 7 days to 10 years, is set here where the investor parks his money in the FD account. The predetermined fixed interest rate is higher than the interest rate on a typical savings account. In exchange for conventional FDs, you can use loan and overdraft services. You may also withdraw your funds before to the account's maturity, but you will be charged a fee.

Tax-avoidance FDs

These FDs have a five-year lock-in term that is required, thus early withdrawals are not permitted. Additionally, there are no loan or overdraft options for tax-saving FDs. However, section 80C of the Income Tax Act allows you to request tax exemptions of up to Rs 1.5 lakh.

FDs in total

These FDs allow you to choose the frequency of compounding of interest. Your investment amount is increased by the interest, which is paid when the FD reaches maturity.

Non-accumulative FDs

You can select the frequency of interest payments with these FDs. For individuals searching for a reliable source of income, it is an excellent investment.

FD for senior citizens

These are for those who are older than 60. They provide interest rates that are higher than Standard FDs. A person may work here for ten days or ten years.

Flexible FDs

You can benefit from these FDs' simplicity and flexibility as both a savings account and an FD. You get the greater interest rates of FDs plus the liquidity of savings accounts because they combine the features and advantages of both.

Eligibility Criteria for Fixed Deposit Investment:

The Following entities are Eligible to open a Fixed Deposit Account in India:
v  Indian Resident
v  NRI
v  Minors
v  Senior Citizens
v  Companies
v  Partnership Firms
v  Individuals or Joint Ventures
v  Societies or Clubs
v  Solo-Proprietorship

How to open a Fixed Deposit

Application form for opening fixed deposit can be obtained from:
v  Visit the nearest branch of the bank where you want to open your FD.
v  Download the application form from the official website of the bank where you want to open FD account.

Documents Required for Fixed Deposit:

Category Documents
An Individual, Hindu Undivided Family, Solo Proprietorship Concern
v  Photograph
v  ID Proof Passport, PAN Card, Driving License, Voter ID, Government ID Card, Senior Citizen ID Card
Address Proof Telephone Bill, Electricity Bill, ID Card Issued by Post Office, Bank Statement with Cheque
v  Copy of the Trust Deed
v  Copy of Registration Certificate
v  Copy of the resolution of the trustees approving the membership
v  Concerned with account opening and operation
Photos of Members running the Account
v  By-Laws of the Associations
v  Copy of the resolution of the committee approving the membership
v  Concerned about account opening and activation
Photos of members running the account
Partnership Firm
v  Partnership deed
v  Letter from the partners authorizing the relevant persons to open and operate the account
Photos of the people running the account
Public or Private Limited Companies
v  Board Resolution/Letter of Authority
v  Memorandum & Articles of Association
v  Certificate of Incorporation
v  Certificate of Commencement of Business (Public Limited Company)
v  Form 32 in case list of directors are not original subscribers to Memorandum & Articles of Association (in case of Private Limited Cos) Duly acknowledged by ROC
Governing Act / Rules and Regulations (PSUs) (certified true copy)

How to Choose the Right Fixed Deposit

Factors to consider while choosing Fixed Deposits:
v  Compare FD interest rates of different banks.
v  Review the creditworthiness of the lender by examining the security rating of fixed deposits issued by ICRA or CRISIL.
v  Choose whether you want lump sum or non-lump sum fixed deposit.
v  Choose a bank that offers good customer service and a hassle-free process for opening an FD.

Fixed Deposit Interest Rates Check the Latest Fixed Deposits in India

Below are the latest interest rates offered by top banks for tenures ranging from 7 days to 10 years

Name of the Bank For General Citizens (p.a.) For Senior Citizens (p.a.)
State Bank of India 2.90% to 5.50% 3.40% to 6.30%
HDFC Bank 2.50% to 5.75% 3.00% to 6.50%
IDBI Bank 2.70% to 5.60% 3.20% to 6.35%
Kotak Mahindra Bank 2.50% to 5.90% 3.00% to 6.40%
RBL Bank 3.25% to 6.65% 3.75% to 7.15%
Punjab National Bank 3.00% to 5.60% 3.50% to 6.10%
Canara Bank 2.90% to 5.75% 2.90% to 6.25%
Axis Bank 2.50% to 5.75% 2.50% to 6.50%
Bank of Baroda 2.80% to 5.35% 3.30% to 6.35%
IDFC First Bank 3.50% to 6.50% 4.00% to 7.00%
Bank of India 2.85% to 5.20% 3.35% to 5.95%
Punjab and Sind Bank 3.00% to 5.40% 3.50% to 5.90%
Yes Bank 3.25% to 6.25% 3.75% to 7.00%
IndusInd Bank 2.75% to 6.50% 3.25% to 7.00%
UCO Bank 2.55% to 5.30% 2.80% to 6.10%
United Bank of India (now Punjab National Bank) 3.00% to 5.25% 3.50% to 5.75%
Allahabad Bank (now Indian Bank) 2.80% to 5.35% 3.30% to 6.10%
Indian Bank 2.80% to 5.35% 3.30% to 6.10%
Indian Overseas Bank 3.40% to 5.45% 3.00% to 5.45%
Bandhan Bank 3.00% to 6.25% 3.75% to 7.00%
HSBC Bank 2.25% to 5.50% 2.75% to 6.00%
Syndicate Bank FD (now Canara Bank) 2.90% to 5.75% 2.90% to 6.25%
Duetsche Bank 2.30% to 7.00% 2.30% to 7.00%
SBM Bank 2.50% to 7.00% 3.00% to 7.50%

Top Tax Saver FD Interest Rates:

Tax-saving FDs are exempt up to a maximum of Rs 1.5 lakh under Section 80C of the Income Tax Act, with a maximum deposit of Rs 1.5 lakh. The lock-in period is 5 years. An additional interest rate of 0.50% is offered to senior citizens.

Name of the Tax Saving For General Citizens (p.a.)  For Senior Citizens (p.a.)
SBI Bank Tax Saving  5.50% 6.30%
IndusInd Bank Tax Saver Scheme 6.50% 7.00%
RBL Bank Tax Saving 6.30% 6.80%
HDFC Bank Tax Saving 5.60% 6.10%
Canara Bank Tax Saving 5.75% 6.25%
Axis Bank Tax Saving 5.75% 6.50%
Bank of Baroda Tax Saving 5.35% 6.00%
IDFC First Bank Tax Saving 6.50% 7.00%
PNB Tax Saving 5.50% 6.00%
Punjab and Sind Bank Tax Saving 5.40% 6.40%
IDBI Bank Tax Saving 5.60%6.35%

Highest Small Finance Bank FD Interest Rates for Below Rs.2 crore

Small finance banks also offer higher interest rates on FDs. Here are the maximum interest rates for deposits below Rs 2 crore for tenures ranging from 7 days to 10 years.

Name of Bank or General Citizens (p.a.) For Senior Citizens (p.a.)
Jana Small Finance Bank 2.50% to 7.00% 3.30% to 7.80%
Utkarsh Small Finance Bank  3.00% to 7.25% 3.50% to 7.75%
Equitas Small Finance Bank 3.50% to 6.75% 4.00% to 7.25%

Top NBFCs FD Interest Rates (Non-Banking Financial Companies)

NBFCs also offer competitive interest rates on their fixed deposit accounts. Here are the maximum interest rates for deposits below Rs 2 crore for tenures ranging from 1 year to 5 years.

Name of Bank Tenure For General Citizens (p.a.) For Senior Citizens (p.a.)
LIC Housing Finance  12 months to 60 months 5.60% to 6.60% (up to deposit of Rs.20 crore for cumulative) 5.85% to 6.85% (up to deposit of Rs.20 crore for cumulative)
PNB Housing Finance  12 months to 120 months 5.75% to 7.00% 6.00% to 7.25%
Shriram City Union Finance  12 months to 60 months Up to 7.80% Up to 8.30%

Senior Citizen Fixed Deposits:

Fixed deposits for senior citizens have certain features that differentiate them from fixed deposits for general public, which are:
v  The depositor should be 60 years and above when opening a fixed deposit account
v  Depending on the bank, interest rates can be as high as 0.25% to 0.50%
v  Tenure is 7 days to 10 days
v  Loan can be availed against FD
v  Premature withdrawal penalty is same as general public

Factors that Affect FD Interest Rates:

There are many factors that affect Fixed Deposit interest rates, some of which are given below:

v  Deposit Tenure: The shorter the tenure, the lower the interest rate and the higher or medium term, the higher the interest rate.
v  Deposit Amount: Higher deposit amounts will fetch you higher interest rates, especially for total deposits above Rs 1 crore.
v  Depositor Type: Senior citizens will get an additional interest rate of 0.25% to 0.50% on fixed deposits.

Fixed Deposit Interest and Income Tax

v  The income you earn in your FD is called income from other sources and is fully taxable.
v  Banks will not deduct TDS if your interest income from fixed deposits is less than Rs 40,000 in a year.
v  You have to submit Form 15G and Form 15H to the bank at the beginning of the financial year. Banks will not deduct TDS after submission of form.

CRISIL & ICRA Rating List for Corporate Fixed Deposits

It is beneficial to understand the credit ratings of corporate fixed deposits before you open an account. These ratings are a testament to the consistency, stability and reliability of the companies issuing these FDs.
CRISIL Credit Ratings for FDs fall under the following categories:
Rating Standard
FAAA Highest safety
FAA High safety
FA Adequate safety
FB Inadequate safety
FC High risk
FD Default
NM Not Meaningful

The ICRA credit ratings for FDs fall under the categories as given below:
Rating Standard
MAAA Highest credit quality
MAA High credit quality
MA Adequate credit quality
MB Inadequate credit quality
MC Risk-prone credit quality
MD Lowest credit quality