Characteristics of Fixed Deposits from Banks
- Single FD: An FD account allows only one deposit. For more investments, you need to open a new fixed deposit.
- Tenure: The tenure can be from 7 days to 10 years. You can choose the maturity in days, months, or years.
- Minimum Investment: The minimum investment amount depends on the bank or NBFC and usually varies between Rs 1,000 and Rs 5,000.
- Maximum Investment: There is no maximum limit for investment.
- Interest Rate: The interest rate is higher than the savings account rate. It is fixed and does not change after investment. Market changes do not affect the fixed rate on any FD.The highest fixed deposit (FD) rates vary from bank to bank in India.
- Interest Payout: You can opt for a regular interest payout or payout at maturity. You can choose the monthly, quarterly, half-yearly, or yearly payout.
- Lock-in Period: A fixed deposit has a lock-in period. Premature withdrawal attracts penalties.
- Loan Against FD: In an emergency, you can get a loan against a fixed deposit. The interest rate on this loan is lower than other loans. This is because the FD is collateral for the loan against the FD.
Factors that Affect the Interest Rates of Fixed Deposits
Fixed deposits are a popular and safe investment option in India. They offer guaranteed returns and are not affected by market fluctuations. However, the interest rates of fixed deposits are not fixed and can change over time. Several factors influence the interest rates of fixed deposits in India, such as
RBI policy
The Reserve Bank of India (RBI) is India’s central bank and regulates the country’s monetary policy. The RBI sets the repo rate to lend money to commercial banks. The repo rate affects the cost of funds for banks and influences the interest rates they offer on fixed deposits.
Inflation
Inflation is the general increase in the prices of goods and services over time. Inflation reduces the purchasing power of money and affects the real returns of fixed deposits. When inflation is high, fixed deposit interest rates tend to be high as well, as investors demand higher returns to compensate for the loss of value of money. When inflation is low, fixed deposit interest rates tend to be low.
Economic Condition
The country’s economic conditions also affect fixed deposit interest rates. When the economy grows, more credit and investment demand increases interest rates. When the economy slows, there is less credit and investment demand, resulting in lower interest rates.
Deposit Amount
The amount of money deposited in a fixed deposit also influences the interest rate banks offer. Generally, banks offer higher interest rates for larger deposits and lower interest rates for smaller deposits. This is because larger deposits help banks maintain their liquidity and profitability, while smaller deposits increase operational costs.
Deposit Tenure
The duration of a fixed deposit also affects the interest rate banks offer. Generally, banks offer higher interest rates for longer tenures and lower interest rates for shorter tenures. This is because longer tenures allow banks to lock in funds for a longer period and earn more interest income, while shorter tenures increase their liquidity risk and opportunity cost.
World-class wealth management using science, data and technology, leveraged by our experience, and human touch.
Contact
- 1800-102-1265
- Address
Explore
- Mutual Fund
- Fixed Deposit
- US Stocks
- ETF
- NFO
- Gold Rates
- Recurring Deposit
Knowledge Base
- MF Articles
- Taxation
- FD Articles
- Personal Finance
- Saving Schemes
- Wealth Creation
About
- Meet the Team
- How it Works
- Awards
- In the News
- Career
- Reviews
Quick Links
- Blog
- Planning Tools
- Rent Receipt
- Webstories
Funds by Category
- Value Mutual Funds
- US Equity Mutual Funds
- Ultra Short Term Mutual Funds
- Thematic Mutual Funds
- Retirement Mutual Funds
- Pharma Sector Mutual Funds
- Money Market Mutual Funds
- Low Risk Mutual Funds
- IT Sector Mutual Funds
- Infra Sector Mutual Funds
- High Risk Mutual Funds
- Gold Mutual Funds
- Fund of Funds
- New Fund Offers (NFO)
- Mutual Fund NAV
Top AMC
- Axis Mutual Fund
- Franklin Templeton Mutual Fund
- SBI Mutual Fund
- HDFC Mutual Fund
- TATA Mutual Fund
- Kotak Mutual Fund
- Motilal Oswal Mutual Fund
- ICICI Mutual Fund
- Mirae Asset Mutual Fund
- Aditya Birla Mutual Fund
- All AMCs
Top FD Providers
- SBI Fixed Deposit
- Post Office Fixed Deposit
- LIC Fixed Deposit
- HDFC Fixed Deposit
- PNB Fixed Deposit
- IOB Fixed Deposit
- Bank of Baroda Fixed Deposit
- Canara Bank Fixed Deposit
- City Union Fixed Deposit
- DCB Fixed Deposit
Best Funds
- Best Short Term Mutual Funds
- Best Long Term Mutual Funds
- Best Large Cap Mutual Funds
- Best Mid Cap Mutual Funds
- Best Small Cap Mutual Funds
- Best Fixed Maturity Plans
- Best Equity Mutual Funds
- Best International Mutual Funds
- Best Diversified Mutual Funds
- Best Energy Sector Mutual Funds
Calculators
- SIP Calculator
- ELSS Calculator
- Lumpsum Calculator
- EMI Calculator
- FD Calculator
- RD Calculator
- NPS Calculator
- Home Loan EMI Calculator
- PPF Calculator
- Income Tax Calculator
- Retirement Calculator
- Post Office FD Calculator
- SBI PPF Calculator
- Sukanya Samriddhi Yojana Calculator
- HDFC PPF Calculator
- Post Office Monthly Income Scheme Calculator
- CAGR Calculator
- Rent Receipt Generator
- Compound Interest Calculator
- EPF Calculator
- Net Present Value Calculator
- Index Fund Calculator
Popular Search
- Recurring Deposit
- Salary Slip
- PPF Interest Rate
- SIP Meaning
- Yield to Maturity
- Post Office Scheme
- Section 143(1)
- SIP vs Mutual Fund
- IPO Watch List
- Nifty Meaning
- Upcoming IPOs 2023
- ETF Vs Mutual Fund
- Money Market Instruments
- Mutual Fund Cut Off Time
- Section 80C
- Income Tax Rates 2023
- Portfolio Management Service
- Privacy Policy
- Disclosures
- Security
- Sitemap
Corporate Office : Indiqube @ The Leela Galleria 3rd Floor, No. 23, Old Airport Road, Bengaluru, Karnataka 560008
Mutual Fund investments are subject to market risks. Please read all scheme related documents carefully before investing. Past performance is not an indicator of future returns.
© Scripbox Advisors Private Limited 2024
Financial Products and Services are provided by Scripbox Group Companies and third party service partners listed here