Fixed deposits can be claimed as a safe and guaranteed mode of savings and earning for anyone. It basically refer to granting fixed rates of interest on your deposits made for a tenure up to ranging from a week to 10 years. Fixed deposit have become a popular saving tool among many investors. The credit for the popularity goes to flexible tenure and the guaranteed returns that FDs provide. Also, since the interest rate of a fixed deposit remains the same throughout the tenure, not much financial strategising is required once you deposit the money.
Types of banks offering fixed deposits
There are several banks, both nationalised and private that offer fixed deposit schemes for varying interest rates and come with their own set of benefits as well as terms and conditions. In the post covid scenario, despite the repeated rectification and drawing down the repo rates by the RBI, banks have been willing to offer fewer loans to people and even if they do, charge more interest on the same. The same applies to fixed deposits schemes. Since long term deposits mean they will have to pay higher interests, the banks usually go for short term or medium term deposits at higher principals and for their long term deposits they offer lower interest rates.
- Nationalised banks like SBI, Punjab Sind Bank etc offer some of the most attractive interests on fixed deposits.
- On the other hand, there’s another category of private banks like Axis or HDFC Bank which offer quite high interest rates on their fixed deposit accounts but also require significant investment.
Why fixed deposit rates vary across banks
The main reason behind such difference is that the nationalised banks have longer tenure. This is because it wouldn’t be profitable for them to offer high interest for a prolonged period. But most of the private lenders or companies prefer short or medium terms. That is because by doing so, they can continue their business and keep earning profits too.
Best bank for fixed deposit
Many banks have added FD to their financial offerings. Among all those banks, SBI is undoubtedly the best bank if you are looking to open your fixed deposits account on a safe and reliable institution backed by the centre.
Longer tenor period for ranging interest rates
They allow you to open a fixed deposit account for a period ranging between 7 to 10 years. Further, the interest rates are quite attractive, ranging from 2.9 to 5.10% p.a. for general citizens and almost 0.8% p.a more for senior citizens.
Different types of FD schemes
Under the fixed deposits scheme, they offer multiple varieties for investment like the fixed deposit savings scheme, SBI tax saving scheme, multi-option deposit scheme and reinvestment plans.
Minimum deposit requirements
They have a very basic minimum deposit amount or principal requirement to open the account, only 1000 rupees and there’s no bar to the amount of money you will be keeping as a deposit. Moreover, it offers nomination facilities along with a monthly, quarterly, and calendar quarter repayment option.
Allows for premature withdrawal along with TDS
It allows for premature withdrawals which means you can draw out a certain sum of money or even the whole of it before the deposit hits its maturity period. You’ll be able to get the interests earned on the deposits for the time it was in the Bank also but provided it has been there for a minimum of 7 days. One con is the taxation, there’s TDS applicable on the fixed deposits earnings which can reduce your net income.
Flexible interests payment
You can either take out interests on a monthly or quarterly basis or agree to take them out in a cumulative manner at the end of the maturity period. The banking system, both online and offline is pretty flexible and as such, there’s not much scope of making an error or not being able to reap whatever you’ve sown.
How to apply for FD?
There are certain eligibility criteria however that an applicant who wishes to open an FD account in the State Bank of India must fulfil. These include his citizenship, residence of India and members of HUF or Hindu Undivided Family, local bodies, firms, government departments, etc. To open an account all you need to produce are valid identity proof and address proof like Aadhar, voter or pan card or even driver’s license and your KYC documents. You can open an account either by visiting their online portal or going physically to your nearest SBI branch.
Now that you know which is the best and most reliable government institution for keeping your money in, go to their site and read thoroughly their policy guidelines and invest.
