Different Types Of Fixed Deposits In India
Apart from the types of fixed deposits, we have learned in earlier units. There are a few more different types of FDs available. In India, Fixed Deposits are a popular investment choice. In general, the following types of Fixed Deposits are offered by banks in India:
Regular Fixed Deposits
This is the vanilla fixed deposit where the money is deposited for a fixed tenure and the bank pays a certain rate of interest. The customer has the option to choose the interval at which he/she will withdraw the return.
In this deposit, the customer deposits a fixed sum of money every month for a predetermined period of time. The bank pays a rate of interest to customers in return.
Tax Saving Fixed Deposits
These are specialized Fixed Deposits where the principal amount gets a tax exemption. The principal amount is locked for five years. A premature withdrawal facility is not available on these kinds of deposits.
Senior Citizen Fixed Deposits
These Fixed Deposit schemes are for people above 60 years of age. They attract an additional rate of interest since a customer’s source of income is limited post-retirement.
Sweep-in Fixed Deposits
This is a kind of fixed deposit that gives a savings account holder freedom to enjoy greater returns. In this kind of deposit, the account holder can designate a limit in his bank account. When the balance in the account goes above the limit, a fixed deposit is automatically created so that the fund earns higher returns. Similarly, when the balance in the account goes below a certain amount, the fixed deposit automatically breaks and the money is swept back to the account. This is a special kind of fixed deposit which is offered by only certain banks such as Kotak Mahindra Bank.