A fixed deposit (FD) is a deposit account offered by banks for a fixed period at a fixed interest rate. You can keep a fixed sum in this account. The money has to be deposited in lump-sum during the opening of the account. At the end of tenure, the earned interest is calculated on the principal amount, and the same is credited to your bank account.
Fixed accounts earn a higher interest than the regular savings bank accounts. Fixed deposit interest rates are prompted by the RBI’s monetary policy such as that for base rate, repo rate, economic conditions, level of credit demand, and internal liquidity positions of banks.
Fixed deposit rates in all bank is as follows.
FD interest rates of all banks are calculated on interest rates and the compounding frequencies.
The formula used for calculating all banks interest rates for fixed deposits is mentioned below: A = P * (1+ r/n) ^ n*tI = A – P A = Maturity valueP = Principal amountr = Interest ratet = Number of yearsn = Compounded interest frequencyI = Earned interest amount
Fixed deposits in banks are a risk-free investment option with a rate up to 9%. They offer moderate returns, which can cover the inflation rate. As FDs carry market and credit risk, you must be careful before choosing a deposit scheme of non-banking firms. Bank fixed deposits being risk-free; do not need a credit rating to offer a slightly lower rate than FDs from non-banks.
All bank FD rates are influenced by deposit amount, tenure, and depositor type.
Below given are some of the features of FD schemes in India.
TDS will be applicable on all bank interest rates on FDs. Basically the tax is applicable on the earned interest of the principal amount. TDS is calculated in the end of every financial year.
Disclaimer: All information stated is purely for informational purpose. The fixed deposit schemes and rates may change with a change in RBI policies and the bank’s policies.
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