Return to Fixed Deposits

About Fixed Deposits

In deposit terminology, the term Fixed Deposit refers to a savings account or certificate of deposit that pays a fixed rate of interest until a given maturity date. Funds placed in a Fixed Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn with advanced notice and/or by having a penalty assessed.

In other words, it is a deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a month to a few years. When a term deposit is purchased, the lender (the customer) understands that the money can only be withdrawn after the term has ended or by giving a predetermined number of days notice.

The interest payments in a Fixed Deposit are generally :

  • Maturity
  • Yearly
  • Half-yearly
  • Quarterly
  • Monthly

There are two types of Fixed deposits in India. One is Fixed Deposits in Banking Sector and the other is Non banking or Manufacturing Companies Fixed deposits which comprises of various companies, Private and Public Institutes and post offices deposits.

Types of Company fixed deposits:

  1. Non-cumulative (Recurring) Fixed deposits – Monthly as well as quarterly income deposits.
  2. Cumulative Fixed deposits
  3. Reinvestment Deposits
  4. Callable Fixed deposits