Indian fixed deposit Schemes, Get attractive returns (interest) and tax benefits.

Introduction: We all want to see our investments grow quickly, safely, and securely. There are various options available around us. For example real estate, startup of a business, partner of a business, stock market, bullion market, cryptocurrency, special bonds, Fixed deposit in Government Institutions, Corporate fixed deposit, debt fund, etc. Each investment option has pros and cons. Different people have different goals for investment, different financial conditions,  different thinking, etc. Accordingly, people select their own way to invest and grow their money. Some of the options of investment may have high returns but with a high risk of high loss. Therefore, your portfolio of investment must have the portion for a fixed deposit scheme. Fixed deposit schemes always have zero risk or almost zero risk for loss. The fixed deposit scheme is also called a Term deposit or Time deposit scheme, which gives an assured return after a predetermined period. These schemes are governed by the Reserve Bank of India (RBI). It means, always, we will get a positive return, with no chances of loss. It will compensate for high-risk investment. Some of the fixed deposit schemes offer income tax benefits also. Loan can be availed against Fixed Deposit (FD). Moreover, unlike other investment options like real estate or the stock market, you are not required to do any research or spend time daily. If you deposited the money in a fixed deposit scheme for 1 year, it means, no need to take tension for 1 year, you will get a positive return as conveyed at the time of investment. In this blog, we will explore these options of fixed deposit schemes available in the Indian market.

Fixed deposit schemes: Here we will describe the various basic facts about the fixed deposit schemes available in the Indian market.

Minimum and maximum amount ceiling: Minimum - We can start with a small amount, say INR 1000. Maximum - different schemes have different maximum limits for the investment. Recurring deposit schemes (Systematic Investment plan - SIP) are also available, in which you can deposit a fixed amount after a fixed interval of time.

Tenors: Investment can be done for a few days to a long time like 10 years, etc.

Interest rate: Different schemes have different interest rates. Example - Annual simple interest, monthly, quarterly or half yearly, yearly cumulative (compounded)  interest rate, etc.

Mode of Payment on Maturity: Cumulative scheme: On maturity, your principal amount along with interest will be transferred to your assigned savings bank account. Interest may be a simple annual rate or compounded quarterly or otherwise. Non - Cumulative scheme: Payment of interest may be made monthly, quarterly, half-yearly, or yearly.  Various other options auto-renewal etc. may also be available.

For minors Different options are available for minors.

Joint account: A joint account facility in either or survivor mode is available in different schemes.

Nominee: A nomination facility is available so that in case of casualties, money can be transferred to the authorized nominee(s).

Premature withdrawal: Premature withdrawal is possible in several schemes except a few ones. However, terms and conditions apply.

Insurance: Various fixed deposit schemes linked with different types of insurance policies are available in the Indian market.

Where should we go to invest in fixed deposit schemes? Nowadays, normally, no need to go anywhere, online facilities are available to invest and withdraw money. However, offline facilities are also available.

Who is providing a fixed deposit scheme? Post offices, Public sector banks, private banks, small finance banks, cooperative banks, Non-Banking Finance (NBC) companies, Corporate sectors, publicly listed companies, etc. are offering fixed deposit schemes.

Eligibility: Indian citizens and other specific categories like NRI (Non-Resident Indians), etc. are eligible to invest in the fixed deposit schemes. However, terms and conditions vary from scheme to scheme. Some schemes have an age bar like Senior Citizen Saving Scheme. etc.

Currency: In addition to Indian Rupees, some schemes are also available in foreign currencies like US$, etc.

Documents required: PAN card, savings bank account, Aadhaar card, etc.

Different types of Fixed Deposit schemes: Different types of fixed deposit schemes are available in the Indian market. Each scheme is different from the others. Everybody has different targets, different capacities,  different appetites, etc., accordingly, people can select the scheme(s) as per their needs. Some of the Deposit schemes are described below:

Fixed deposit schemes operated by Post offices in India: Some of the Fixed deposit schemes offered by Post offices in India are described below. Before investment visit the concerned website or Post office for detailed and updated information.

National Savings Time Deposit Scheme (TD): Lock-in period; 1, 2, 3, and 5 years. Premature closure is allowed after six months. Interest rate: 6.9%, 7%, 7.1% and 7.5% respectively (compounded quarterly). Pledging facilities are allowed. TD for 05 years qualifies for income tax benefits under section 80C.

5 years Recurring Deposit Scheme (RD): Lock-in period: 05 years.  Premature closure is allowed after 3 years. Interest rate: 6.7% (compounded quarterly) A loan facility may be availed.

National Savings Monthly Income Scheme (MIS): Interest rate: 7.4% (monthly paid). Maximum investment limit: 9 lakh and 15 lakh for single account and joint account respectively. Lock-in period: 5 years. Premature closure is allowed after 01 years.

Senior Citizens Savings Scheme (SCSS): Lock-in period: initially 05 years, may be extended once for 03 years. Premature closure is allowed at any time. Maximum limit: 30 lakh. Interest rate: 8.2% (quarterly paid). The interest rate for an extended period is the prevailing rate at the beginning of the extension. Deposits qualify for income tax benefits under section 80C.

Public Provident Fund (PPF): Maximum investment limit: 1.5 lakh per financial year. Interest rate: 7.1% per annum. (compounded yearly). Interest is calculated quarterly and decided by the Government. Principal amount and interest both are exempted from Income tax. The loan can be taken after 01 years. One-time withdrawal in a financial year for  50% of the deposit, is allowed after 05 years.

Sukanya Samriddhi Account (SSA): Interest rate: 8.2% compounded yearly. Only girl children below the age of 10 years are eligible. Only 01 accounts are allowed either in a bank or post office. Maximum investment limit: 1.5 lakh per year. Deposits qualify for deduction under Income tax act. Interest earned is tax-free. Deposit time limit: 15 years from the opening date of the account. Maturity time limit: 21 years from the date of opening. Or before 1 month or after 3 months of marriage. The age of a girl at the time of Marriage should be a minimum of 18 years. 50% withdrawal of balance in preceding year is allowed at the age of 15 years or after passing the 10th class exam. Premature closure is allowed after 5 years, only in some special conditions.

National Savings Certificates (VIII issue) (NSC): Interest rate: 7.7% compounded yearly but paid on maturity. Lock-in period: 05 years Investment limit: No maximum limit. Deposits qualify for deduction under the Income Tax Act. A pledging facility is available. Premature closure and transfer of account from one person to another is allowed in some special conditions.

Kisan Vikas Patra (KVP): Interest rate: 7.5 % per annum ( annually compounded). Investment Limit: No maximum limit. Lock-in period: 2 years and 06 months or applicable at the time of investment. Transfer and pledging facilities are available. Premature closure is allowed only in some special conditions.

Mahila Samman Savings Certificate: Interest rate: 7.5% per annum ( compounded quarterly). Only a woman or minor girl is eligible. Investment limit: 02 lakh maximum. 40% withdrawal is allowed after 01 years. Premature closure is allowed in some special conditions. Lock-in period: 02 years.

PM Cares for Children scheme (2021): The scheme is governed by the Ministry of Women and Child Development. Children who are not attaining the age of 18 years between 11-02-2020 to 28-02-2022, and lost both parents or the last surviving parent or adopted parents or sole guardian during the COVID-19, are eligible to get the benefit. Please consult the post office and concerned district magistrate for the current status of the scheme and other terms & conditions.

Fixed deposit scheme under Public Sector Banks & Institutions:
Fixed deposit schemes under the banner of Public Sector Banks are almost similar.  Lock-in periods of FDs roughly vary from 7 days to 10 years. Accordingly, the interest rate roughly varies from 3 % to 8% per annum. Senior citizens get the interest a little bit higher around 0.5 %. For example, Here we will show the details of different types of the FD scheme available in the State Bank of India:
State Bank of India - Fixed Deposit Schemes
Interest rate per annum below Rs. 2 crore
General Public	Senior Citizen
Tenor - 7 days to 45 days
3.5%	4%
Tenors - 46 days to 179 days
5.5%	6%
Tenors - 180 days to 210 days
6%	6.5%
Tenors - 211 days to less than 01 year
6.25%	6.75%
Tenors - 1 year to less than 2 years
6.8%	7.3%
Tenors - 2 years to less than 3 years
7%	7.5%
Tenors- 3 years to less than 5 years
6.75%	7.25%
Tenors - 5 years and up to 10 years
6.5%	7.5%
Tenors - 400 days (Amrit Kalash) (till 30-09-2024)
7.1%	7.6%
Tenors - SBI Green Rupee Term Deposit (SGRTD)  1111, 1777, 2222 days
6.65%, 6.65%, 6.40% respectively	7.15%, 7.15%, 7.40% respectively
Tenors - Sarvottam (noncallable) domestic retail term deposits (above 01 crore to less than 02 crore)
7.29% and 7.61% for 01 year and 02 years respectively	7.82% and 8.14% for 01 year and 02 years respectively
Tenors - Sarvottam (noncallable) domestic retail term deposits (02 crore and above)
7.5% and 7.61% for 01 year and 02 years respectively	8.03% and 8.14% for 01 year and 02 years respectively
Note: In addition, Recurring deposit schemes, Annuity deposit schemes, Multi options deposit schemes, SBI tax saving schemes, Motor Accident Claims Annuity (Term) Deposit accounts (MACD), Special term deposits, Floating Rate Bulk Term Deposits (FRBTD), National Pension Scheme (NPS), PPF, Capital Gains Account (to get relief from tax by depositing sale value of the plot, flat, etc.),  Gold banking ( your return linked with gold rate), Senior Citizen Savings Scheme, Sukanya Samriddhi Account Scheme, RBI bonds, etc.

Fixed Deposit Schemes by Small Finance Banks:

Small finance banks target the customers of lower income groups (small and microfinance business holders or startups, farmers, laborers, small shopkeepers, etc.).  They are governed by the RBI, so deposits in these banks are almost safe. These banks provide the interest a little bit higher than other banks. May be up to 9% for the general public and 9.5% for senior citizens for the tenure of roughly 3 years.

Fixed Deposit schemes by Private banks: Private banks also offer different types of fixed deposit schemes. Their interest rates are similar to or a little bit higher than Public Sector Banks.

 

Fixed Deposit schemes by Corporations, publicly listed companies & their ratings: Company fixed deposit schemes (Corporate FD) are offered by Financial, Non Banking Finance Companies (NBFC), etc. Their interest rates are higher than other FD schemes but have a risk factor. Means not 100% safe. However, Credit ratings given by independent bodies can give you a look at the risk meter. If the credit rating is high, the company background is strong and repayment history is good, terms and conditions are favorable, we may go ahead for a deposit with very little risk.     FD schemes offered by a few companies are listed below:

Company  Name: Mahindra Finance Ltd Credit rating: CRISIL- FAAA & ICRA - MAAA Safety: Highest. Tenors: 1 to 5 years. Rate of Interest: 7.6 to 8.05 % Interest rate for senior citizens: + 0.25 % Investment limit: 5000 to 5 crore.

Company  Name: Bajaj Finance Ltd Credit rating: CRISIL- FAAA & ICRA - MAAA Safety - Highest Tenors: 1 to 5 years Rate of Interest: 7.4 to 8.05% Interest rate for senior citizens: + 0.25%

Company  Name: Shriram Transport  Credit rating: CRISIL- FAA & ICRA - MAA Safety - High Tenors: 1 to 5 years Rate of Interest: 7.85 to 10.5 %  Interest rate for senior citizens: + 0.5% Women depositors : + 0.1% Investment limit: 25000 to 5 crore.

Company  Name: ICICI Home Finance    Credit rating: CRISIL- FAAA & ICRA - MAAA Safety: Highest. Tenors: 1 to 10 years. Rate of Interest: 7.25 to 8.87 % (effective yield) Interest rate for senior citizens: + 0.25% Investment limit: 5000 to 2 crore.

Company  Name: LIC Housing Finance  Credit rating: CRISIL  FAAA Safety: Highest Tenors: 1 to 5 years Rate of Interest: 7 to 7.5 %  Interest rate for senior citizens: +0.25% Investment limit: 20000 to 20 Crore.

Company  Name: PNB Housing Finance Credit rating: CARE FAA+ Safety: High Tenors: 1 to 10 years Rate of Interest: 7.35 to 10.42% (effective yield) Interest rate for senior citizens: +0.25% Investment limit: 20000 to 5 crore

Company  Name: Sundaram Home Finance Ltd Credit rating: CRISIL-AAA/Stable, ICRA-AAA/Stable Safety: Highest Tenors: 1 to 5 years Rate of Interest: 7.4 to 7.9 % The interest rate for senior citizens: +0.35 to 0.50%

Company  Name: Sundaram Finance Credit rating: CRISIL-AAA/Stable, ICRA-AAA/Stable Safety: Highest Tenors: 1 to 3 years Rate of Interest: 7.45 to 7.75% Interest rate for senior citizens: + 0.50%

Note:  Most of the corporate FD schemes offer 0.25% additional interest on renewal. NRI can invest in Corporate FDs.

CREDIT RATING:    A credit rating assesses the ability of the company for timely payment of interest and principal. It is assessed by the specialized agencies. Some of the agencies are listed below: CRISIL (Credit Rating Information Services of India Limited). ICRA (Investment Information and Credit Rating Agency). CARE (Credit Analysis & Research Ltd). A rating is high means the risk is low.  An example of a rating is given below:
Rating	Credit Risk
AAA (Highest Safety)	Lowest
AA (High Safety)	Very Low
A (Adequate Safety)	Low
BBB (Moderate Safety)	Moderate
BB (Moderate Risk)	Moderate
B (High Risk)	High
C (Very High Risk)	Very High
D (Default)	Default

Summary: In the Indian market, various options are available for FD schemes. Which is the best choice? It can be decided by investors only because it depends upon planning, purpose, target, capability, knowledge, proper search, limitation, etc. You may keep in mind the following things: Don't become so greedy, resulting in loss of principal amount. Don't become so conservative, resulting in a loss in interest earnings. Don't ignore the AAA rating. Don't ignore Government-sponsored schemes in Post offices and banks. Portfolios should be diversified. Don't ignore your purpose, or limitation of investment. Do a thorough search for FDs that suit your needs. Think wisely. Go with a financial adviser if you are going to invest a heavy amount.

Disclaimer: This blog is written for educational and informational purposes. The best efforts are made to provide real facts through self-knowledge, and after studying the following & similar websites. The author is not a certified adviser. I do not take any responsibility/guarantee ( legal or otherwise) for its correctness, completeness, consequences, or any typographical error.  Data mentioned in the blog are subject to change from time to time. Before using the given information, cross-check the facts from reliable sources. Please invest with your own decision or take the help of a financial adviser. https://www.5paisa.com https://www.instagram.com https://www.icicibank.com https://www.groww.in https://www.indiapost.gov.in https://www.bankbazaar.com https://www.sbi.co.in https://www.paisabazaar.com https://www.hdfcsec.com https://www.sbisecurities.in

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