Fixed Deposits (FD)

A fixed deposit (FD) is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. Bank FDs are one of the safest investment options available since the returns on the FD are more or less assured.

To make FDs even ‘safer’ the DICGC or Deposit Insurance and Credit Guarantee Corporation, guarantees amount up to ₹ 5,00,000 per depositor per bank. This means that even if the Bank is unable to pay the FD at the time of redemption the DICGC will step in and ensure that the investor is compensated. FDs are also flexible when it comes to the tenure – you can invest for any period of time ranging from 7 days to 10 years. The more the deposit amount for a longer period, the higher will be the applicable interest rate and interest earned due to the power of compounding.

Benefits of Investing in a Fixed Deposit:

• Interest Rates: Putting your hard-earned savings into an FD can give you higher interest rates as compared to a regular savings account. You can potentially earn more interest with Corporate FDs as they tend to have higher interest rates than most banks.

• Assured Returns: This is one of the biggest reasons for the popularity of the FD as a savings instrument is the fact that the Return at the end of the tenure is more or less assured. Once you invest your money in a fixed deposit, you get almost guaranteed returns, as interest rates do not undergo market fluctuations and hence does not impact the deposit amount.

• Loan Against an FD: In case of any emergency, you do not have to break your FD prematurely. Instead, you can leverage your fixed deposit, apply for a loan and continue earning interest on the deposit amount. Most banks and NBFCs only allow you to take up to 90% of your FD as collateral for the loan.

• Flexible Tenure: The decision of the tenure for a fixed deposit account depends solely on the holder of the account. The minimum term of an FD depends on the bank or NBFC and can range from 7 days to 10 years.

Documentation

• Pan Card (Proof of Identity)
• Aadhaar Card/Passport/ Driving License (Proof of Address)
• Cancelled Cheque
• Latest Passport sized Photo

If you are already have an FD earlier with the company, then you can simply mention existing FD receipt number or Customer ID generated by the company. Therefore none of the above documents, other than a cancelled cheque will be needed.

Click Here to peruse the list of FDs available with Epsilon Money.