Invest in best FD with 6.5% returns
FIXED DEPOSIT
Fixed Deposit
Fixed deposit or FD is an investment product offered by banks and non-banking financial companies (NBFCs). This allows customers to safely park their savings and earn interest at a fixed rate thus giving them the much sought after stability. FD interest rate is higher than what customers get on depositing their money in a regular savings account.
Fixed deposits are called as term deposits in banking parlance since these deposits are maintained for a specific period (usually ranging from 7 days to 10 years).
Furthermore, these are secured under the insurance cover of up to Rs. 5 lakh by the Deposit Insurance and Credit Guarantee Corporation or the DICGC.
Why Invest in Fixed Deposits (FD)?
Fixed deposits come with various features and benefits that make investing in fixed deposits a sound decision, especially for risk-averse investors. These are mentioned below:
1. Guaranteed Returns on Investment
FD provides guaranteed returns on investments. The fixed deposit interest rate applicable (at the time of investment) is what the bank commits to pay on the investments and is always risk-free. It is because the FD interest rates are not market-influenced but fixed.
2. Risk-free Investment
Money put into a fixed deposit account with banks (commercial & small finance banks) is 100% safe (up to Rs. 5 lakh). DICGC, a fully owned subsidiary of RBI, guarantees to pay a compensation of Rs. 5 lakh (per bank) if the bank goes into liquidation. This deposit insurance is inclusive of the principal amount as well as the interest earned.
3. Easy Calculation of Returns
Since the parameters (interest rates and tenure) of a fixed deposit are fixed, it becomes easy to predict returns. This, in turn, helps in better financial planning.
With the help of Paisabazaar’s free FD Calculator, you can easily check and calculate estimated returns on FD investments. Enter the amount, fixed deposit tenure and the interest rate corresponding to that tenure and hit the calculate button to see your estimated returns.
4. Tax Saving Investment
All banks and most of the NBFCs offer customers with 5-year tax-saving FD. This scheme allows you to claim deductions u/s 80C of the IT Act, 1961 while filing the ITR. You can invest from Rs 100 to Rs 1.5 lakh in it.
Tax saving fixed deposit comes with a lock-in period of 5 years. This means that premature withdrawal is not available. However, if the first account holder dies during the FD tenure, the nominee can exercise the premature withdrawal option. Also, the tax-saving fixed deposit does not have the loan against FD feature.
5. Loan against Fixed Deposit (FD)
Investors can apply for a loan on their FD investments in times of need. Instead of opting for high-interest personal loans, if you have invested in a fixed deposit, you can avail Loan against FD. This loan can be taken for up to 90% of the FD amount (approximately). This means if you have an FD of Rs. 10 lakh, you can easily get a loan of up to Rs. 9 lakh (approximately).
6. Credit Card against Fixed Deposit
If you have a fixed deposit, you can avail a secured credit card against it. However, the availability depends on the bank or NBFC involved. Its limit is set in line with your FD amount, thus making it secure.
7. Premature or Partial Withdrawal
FDs with premature withdrawal facility allow the depositors to close it before maturity (e.g. an FD booked for 3 years withdrawn after only 1 year). However, account holders are required to pay a premature penalty to the bank for withdrawing the FD amount before deposit tenure. This penalty usually goes up to 1-2%.
8. Affordability
Fixed deposit is a highly affordable investment option as you can start investing from as little as Rs. 100. However, the majority of the top banks in India allow a minimum deposit of Rs. 1,000.
9. Flexible Tenure
Investors can choose to deposit their savings anywhere from 7 days to 10 days. Some banks (e.g. IDBI Bank) offer an extended period of up to 20 years. The interest rates vary with different tenure options.
However, if you are looking to save on income tax, many consider the tax-saving fixed deposit schemes where savings are locked for a minimum of 5 years and the investment made here qualifies for 80C deduction of the IT Act, 1961.
In order to choose the best fixed deposit scheme, you should consider all the aforementioned points thoroughly.
Fixed Deposit Interest Rates 2021
Fixed deposit rates vary from one bank to another and also for different deposit tenure. To know which option would make as the top FD scheme for you, check the list below:
- Best Fixed Deposit Rates in India – 2021
Tenure – 1 Year
| Bank Name | Regular Individuals | Senior Citizens |
| Utkarsh Small Finance Bank | 6.75% | 7.25% |
| Suryodaya Small Finance Bank | 6.75% | 7.25% |
| Equitas Small Finance Bank | 6.50% | 7.00% |
| Fincare Small Finance Bank | 6.00% | 6.50% |
| IndusInd Bank | 6.50% | 7.00% |
| RBL Bank | 6.50% | 7.00% |
| Yes Bank | 6.25% | 7.50% |
| IDFC First Bank | 5.75% | 6.25% |
| DCB Bank | 6.05% | 6.55% |
| Ujjivan Small Finance Bank | 6.50% | 7.00% |
| Bandhan Bank | 5.75% | 6.50% |
| Canara Bank | 5.20% | 5.70% |
Interest rates updated on 22nd February 2021
- Fixed Deposit Interest Rates in India – 2021
Tenure – 3 years
| Bank Name | Regular Individuals | Senior Citizens |
| SBM Bank | 6.50% | 7.00% |
| Suryodaya Small Finance Bank | 7.00% | 7.50% |
| Utkarsh Small Finance Bank | 6.75% | 7.25% |
| Jana Small Finance Bank | 7.00% | 7.50% |
| Equitas Small Finance Bank | 6.65% | 7.15% |
| IndusInd Bank | 6.50% | 7.00% |
| RBL Bank | 6.60% | 7.10% |
| Yes Bank | 6.75% | 7.50% |
| IDFC First Bank | 5.75% | 6.25% |
| DCB Bank | 6.75% | 7.25% |
| Ujjivan Small Finance Bank | 6.05% | 6.55% |
| Bandhan Bank | 5.65% | 6.40% |
| Canara Bank | 5.50% | 6.00% |
Interest rates updated on 22nd February 2021
Note: Aforementioned FD interest rates are applicable on the amount below Rs. 2 Crore.
- Best FD Interest Rates in India – 2021
Tenure – 5 years
| Bank Name | Regular Individuals | Senior Citizens |
| Suryodaya Small Finance Bank | 7.25% | 7.75% |
| Jana Small Finance Bank | 7.25% | 7.75% |
| Equitas Small Finance Bank | 6.40% | 7.10% |
| Utkarsh Small Finance Bank | 6.75% | 7.25% |
| DCB Bank | 6.75% | 7.25% |
| IndusInd Bank | 6.50% | 7.00% |
| Yes Bank | 6.75% | 7.50% |
| SBM Bank | 6.50% | 7.00% |
| RBL Bank | 6.25% | 6.75% |
| Fincare Small Finance Bank | 6.00% | 6.50% |
| Bandhan Bank | 5.50% | 6.00% |
| IDFC First Bank | 5.75% | 6.25% |
Interest rates updated on 22nd February 2021
Note: Aforementioned FD rates are applicable on the amount below Rs. 2 Crore.
Top 10 Bank Fixed Deposit Interest Rates in India – Across Tenure
| Bank Name | Regular Individuals | Senior Citizens | Deposit Tenure |
| SBM Bank | 6.50% | 7.00% | Above 2 year – 3 years |
| Suryodaya Small Finance Bank | 7.25% | 7.75% | 5 years |
| Utkarsh Small Finance Bank | 7.00% | 7.50% | 700 days |
| Fincare Small Finance Bank | 6.50% | 7.00% | 36 months 1 day to 59 months |
| Equitas Small Finance Bank | 6.80% | 7.30% | 888 days |
| IndusInd Bank | 6.50% | 7.00% | 1 year to below 61 months |
| RBL Bank | 6.60% | 7.10% | 36 months to 36 months 1 day |
| Yes Bank | 6.75% | 7.50% | 3 years to <= 10 years |
| DCB Bank | 6.75% | 7.25% | 36 months to 120 months |
| IDFC First Bank | 6.00% | 6.50% | 500 days |
What is a Company Fixed Deposit?
Company Fixed Deposits, also known as Corporate Fixed Deposits, are provided by non-banking financial companies (NBFCs) like PNB Housing Finance Ltd. and Bajaj Finserv, etc.
Features of a company/corporate fixed deposit are:
- Tenure
Unlike regular bank FDs, company FDs offer tenure ranging from 12 months to 120 months. There are limited options available as compared to bank fixed deposits.
- Interest Rates
Companies generally offer better FD interest rates as compared to the likes of SBI FD rates, HDFC FD rates and Axis Bank FD rates, etc. However, small finance banks like Fincare Small Finance Bank and Utkarsh Small Finance Bank are currently offering FD rates at par or in some cases, higher than those offered by company deposits.
- Tax Deduction (TDS)
Tax on company/corporate fixed deposits is deducted @10% like bank FDs. However, the limit is set at Rs 5,000. This means that if your interest income exceeds Rs 5,000 in a financial year, income tax (TDS) will be deducted.
Please note that for bank FDs, tax is deducted when the total interest in one financial year amounts to more than Rs 40,000 (Rs 50,000 in the case of senior citizens).
To avoid TDS, you can submit Form 15G (for senior citizens, submit Form 15H). This form needs to be submitted every year to the company.
- Security
The company fixed deposits are not covered under the DICGC insurance of up to Rs. 5 lakh. This means that if the company goes into liquidation, your money might be at stake. Therefore, it is important to check the credit rating before investing in a corporate fixed deposit.
Top 5 Company Fixed Deposit Providers in India
|
Best Company FD Rates 2021
| Company/NBFC | Rate of Interest* | Deposit Tenure | |
| Regular Individuals | Senior Citizens | ||
| Mahindra Finance | 6.45% | 6.70% | 60 months |
| Shriram Transport Finance | 8.09% | 8.49% | 60 months |
| Bajaj Finserv | 7.00% | 7.25% | 60 months |
| Sundaram Finance Company | 6.22% | 6.71% | 36 months |
| Kerala Transport Development Finance Corporation Ltd | 6.00% | 6.25% | 1 – 3 years |
| LIC Housing Finance FD | 5.75% | 6.00% | 3/5 years |
| PNB Housing FD | 6.70% | 6.70% | 60 months – 120 months |
| ICICI Home Finance FD | 6.25% | 6.40% | >=84 months to <120 months |
| HDFC Ltd. | 6.25% | 6.50% | 66 months |
| HUDCO * | 7.50% | 7.75% | 12 – 36 months |
01. Types of Fixed Deposit
Non-Cumulative Fixed Deposit
Tax Saving Fixed Deposit
Cumulative Fixed Deposit
In cumulative fixed deposits, the interest is compounded monthly, quarterly, half-yearly or yearly. This interest keeps on accumulating and is paid in the maturity amount at completion of the FD tenure.
In other words, the interest accrued is kept with the bank which is further reinvested in the next cycle at pre-fixed rates. This leads to exponential returns. T
his option is good for those who have a stable cash inflow and are not looking for a top-up to their existing income like salaried people.
Non-Cumulative Fixed Deposit
Non-cumulative FD works exactly the opposite of cumulative. Here, interest is paid off to the deposit holder at regular intervals. This frequency can range from monthly to yearly. However, most of the depositors choose the monthly option.
This acts as regular income for individuals like pensioners, freelancers and homemakers, etc.
Tax-Saving Fixed Deposit
Tax-saving FD is a type of fixed deposit where one can save on the income tax. An investor can deposit up to Rs. 1.5 lakh every year. This amount can then be claimed as deductions at the time of filing ITR u/s 80C of the Income Tax Act, 1961.
It should be noted that the interest earned on any tax-saving fixed deposit is taxable.
This type of fixed deposit comes with a lock-in period of 5 years. This means that one cannot prematurely withdraw a tax saver FD. However, the depositor can nominate someone to withdraw the accrued deposit amount before or post maturity in the event of their demise.
The nomination is to be filed at the time of application.
02. Things to know about Tax-Saving Fixed Deposit Account
Interest earned on Fixed Deposit is added to the investor’s annual income and is fully taxable under the income tax slab applicable. FD interest income is considered under ‘Income from Other Sources’ category in the Income Tax Return.
Under Union Budget 2019 announcement, the government raised the TDS (Tax Deducted at Source) threshold limit on interest earned on bank/post office deposits from Rs. 10,000 to Rs. 40,000. Thus, from April 2019, banks will not deduct TDS if income earned by interest is up to Rs. 40,000. On FD interest income more than Rs. 40,000, banks will deduct 10% TDS.
Earlier, banks used to deduct TDS on interest income of more than Rs.10,000. Any individual who is earning FD interest income up to Rs. 10,000 was not deducted any TDS. There used to be no TDS deduction on FD interest income up to Rs. 10,000, but the interest income was added to the annual income.
However, if an individual falls under the 5% income tax slab, then the individual can file Income Tax Return and claim a refund. If an individual is not liable to pay any income tax as per the Income Tax Slabs applicable, then the individual can submit Form15G with the bank to avoid TDS deduction. Similarly, senior citizens can submit Form 15H with their bank to avoid TDS deduction.
However, if any individual falls under any income tax slab which is more than 10%, then he/she is liable to pay more tax (above TDS).
03. Credit Card against FD
04. Fixed Deposit for NRIs
Type of NRI Fixed Deposit
1-Non-Resident External or NRE FD
2-Non-Resident Ordinary or NRO FD
3-Foreign Currency Non-Resident or FCNR FD
4-Resident Foreign Currency or RFC FD
Purpose
1-To remit foreign earnings to India
Deposits converted from foreign currency to Indian Rupee
2-To manage income earned in India
3-To park foreign earnings in Indian account
Deposit not converted to Indian Rupee
4-NRIs /PIOs who have returned to India can park their savings in this FD
Deposits not converted to Indian Rupee
Interest Taxable in India (Yes/No)
1-No
2-Yes (TDS @ 30.90%)
3-No
4-(When the depositor becomes Indian Resident)
05. FD Calculator
A customer looking to invest in a fixed deposit should use the FD calculator to check and compare returns from various banks/companies at different tenure. This way, customers know what to expect. This leads to well-informed financial decisions.
How to use an FD Calculator?
Using an FD calculator is an easy task. Provide the following details in the fields given in the calculator and the calculator will give you an estimate in seconds:
Deposit Amount: It is the amount that an individual wishes to invest in the FD. It starts from Rs. 100. However, many banks offer Rs. 1,000 as the minimum deposit amount.
Rate of Interest: It is the interest rate offered by the bank or the company on the deposit amount for the chosen tenure.
Deposit Tenure: This is the period for which the FD will be active and earn interest. It ranges from 7 days to 20 years. This can be selected in years or months.
Once all the details are filled, hit the “Calculate” button.
06. Documents Required for Opening a Fixed Deposit Account
Compulsory
PAN Card
or
Form 60/61
Photo Identity (ID) Proof (any one of the following)
Aadhaar Card
Voter ID Card
Driving Licence
Address Proof (any one of the following)
Passport
Telephone Bill
Electricity Bill
Bank Statement with a cancelled cheque
Aadhaar Card
07. How to Open a Fixed Deposit Online?
Top Banks in India offering fixed deposit interest rates (Tenure – 1 Year)
| Bank Name | Fixed Deposit Interest Rates (p.a.) | |
| Regular Citizens | Senior Citizens | |
| ESAF Small Finance Bank | 6.50% | 7.00% |
| Utkarsh Small Finance Bank | 6.75% | 7.25% |
| Jana Small Finance Bank | 6.75% | 7.25% |
| Suryoday Small Finance Bank | 6.75% | 7.25% |
| Ujjivan Small Finance Bank | 6.50% | 7.00% |
| Fincare Small Finance Bank | 6.00% | 6.50% |
| RBL Bank | 6.50% | 7.00% |
| IDFC First Bank | 5.75% | 6.25% |
| Bandhan Bank | 5.75% | 6.50% |
| IndusInd Bank | 6.50% | 7.00% |
| Yes Bank | 6.25% | 6.75% |
| Federal Bank | 5.10% | 5.60% |
| HDFC Bank | 4.90% | 5.40% |
| Axis Bank | 5.15% | 5.80% |
| DCB Bank | 6.05% | 6.55% |
| Kotak Mahindra Bank | 4.50% | 5.00% |
| DBS | 4.25% | 4.25% |
| ICICI Bank | 4.90% | 5.40% |
| PNB | 5.20% | 5.70% |
| Canara Bank | 5.20% | 5.70% |
| SBI | 4.90% | 5.40% |
| Bank of Baroda | 4.90% | 5.40% |
