Fixed deposits are generally preferred by ultra-conservative investors who want to save a fixed sum for the long term. However, as an investment tool, FD is opted by a wide demographic in India. Especially for investors with low-risk appetite and who want a balanced portfolio, fixed deposit is a good option. Amongst fixed income investments, bank FDs are the most popular option especially for those investors who have a fixed sum to invest as a lump sum.
Choosing the right bank FD to park your money can sometimes become confusing. From big banks like SBI, ICICI, HDFC, Kotak, Axis, to small finance banks like Jana, AU, Ujjivan, all allow fixed deposits. However, other than the regular bank FDs, a few banks have come up with a modified version of FDs, which are much more flexible in nature as compared to the regular FDs. Some of these are SBI Flexi Deposit Scheme, HDFC Dream Deposits, and ICICI iWish Deposit.
These new deposit offerings from banks differ from regular FDs in some ways. For instance, in a regular fixed deposit, the tenure along with the amount of investment is fixed. You can choose to invest starting from 7 days up to 10 years. It is a one-time investment and the tenure and the maturity of the FD is decided on the date of deposit. These flexible deposits, however, are somewhat similar to a recurring deposit. Under recurring deposits (RD), the tenure and the amount are fixed, and the depositor has to make investments on a regular frequency. It can be either monthly or quarterly. Unlike regular FDs, instead of a single fixed installment every month, depositors can decide to vary his/her installment amount and even the number of monthly deposits.
Names of these flexible fixed deposits differ from bank to bank. Find out what SBI, HDFC and ICICI Bank have to offer.
SBI Flexi Deposit Scheme: Depositors can decide to vary his/her installment amount, instead of a single fixed installment every month as in regular FDs. One can also choose the number of monthly installments, within the annual sum defined. This comes with a minimum and maximum deposit amount of Rs 5,000 and Rs 50,000, respectively, in a financial year, while the minimum installment amount is set at Rs 500. Even though it is said that depositors can deposit any number of installments in a month and any time, but the maximum amount is capped at 10.
Also, if you have opened the account with a certain amount, you cannot deposit more than 10 times the amount in a month. For instance, if you have opened an account with Rs 1,000, the maximum amount that you can deposit will be Rs 10,000.
You can open an SBI Flexi Deposit Scheme either through SBIs online portal, (SBI net banking) or by visiting their branch. The online version of the SBI Flexi Deposit Scheme is called e-SBI Flexi Deposit and is available for 5 years, 6 years and 7 years. The rate of interest is similar to term deposits and is compounded quarterly. Premature withdrawal is also allowed.
HDFC Dream Deposits: With the HDFC Dream Deposits, the installment amount once fixed is not allowed to be altered at a later date. However, if you want to make any addition to installments, you can do so which will be considered as ‘Top-Ups’. Up to a maximum cumulative amount of twice the installment amount, these Top-Ups can be done every month. Depositors can do only three top-ups, which is the maximum number of top-ups one can do in a month, even if their maximum amount has not been reached using the three top-ups. The minimum and maximum tenure is set at 6 months and 10 years, respectively.
ICICI iWish Deposit: With ICICI’s iWish Deposit Scheme, you can set flexible goal amounts, and also decide how much you want to deposit every month. You can start with a minimum deposit amount of Rs. 500. There are no restrictions on the number of investments one can make in a month, and the amount one wants to invest is also flexible, unlike an RD. Another feature is, it does not attract any penalties for missing payments. Also, there are no limits on the number of payments depositors can make in a month.
Even though you can make premature closing of the account, the penalty for premature closing is 0.5 per cent to 1 per cent of the interest rate. Also, the interest will be calculated based on the time the funds remained in the account.
You can open the ICICI iWish Deposit Scheme through ICICI’s online portal and by login into your internet banking. Also, to help you accumulate the desired sum over the desired tenure, the website carries an iWish calculator. The ICICI iWish account can be opened for a minimum tenure of 6 months, and up to a maximum of 10 years.