Most people in India prefer to invest money in fixed deposits (FDs) as they are considered a risk-free investment with guaranteed maturity value.
Most people in India prefer to invest money in fixed deposits (FDs) as they are considered a risk-free investment with guaranteed maturity value. Also, FDs give higher interest rates than the deposits in savings accounts because there are lower withdrawal pressures, which allows the concerned bank or organisation to maintain low liquid funds and invest a major part of the deposits in profitable ventures, resulting in higher gains, some of which are passed on to the depositors as a higher rate of return.
Senior citizens mostly rely on FDs as capital protection is their prime concern and generally get higher interest rates than the younger citizens wherever age-wise different rates are offered.
As FDs are the main source of funds for banks from public, to get high-value transactions passed from banks or to hire a locker, one would be inadvertently made to deposit some amount in FDs depending upon the value of transactions. Starting from as low as 14 days to 10 years or even more, banks offer FDs of various tenures.
Depositors may also get tax deductions u/s 80C on deposits for five years or more in banks and post offices. However, interest earned on fixed deposits are taxable.
The leading scheduled commercial banks of both PSU and private sectors have revised their fixed deposit (FD) rates recently. While the State Bank of India (SBI) and Axis Bank revised the FD rates on February 22 and February 27, respectively, other banks have implemented the new rates during the first week of March. ICICI Bank and HDFC Bank have most recently implemented the new rates as the rates came into effect from March 7, while Kotak Mahindra Bank implemented the new rates on March 5 and Yes Bank on March 2, 2019.
The following table shows the tenure-wise highest rates offered by Axis Bank, Yes Bank, SBI, ICICI Bank, HDFC Bank and Kotak Bank: