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Different Types of Fixed Deposits in India

  • IWB Post
  •  December 6, 2021

Fixed deposits are term deposit accounts that enable you to earn interest by making a deposit of a certain amount for a specific fixed tenure. The type of FD or fixed deposit you choose depends on your particular requirements, and there are many kinds to pick from in India. Most major banks, as well as non-banking finance companies, have facilities for customers to start fixed deposits. Furthermore, you get a range of tenures to select from, and you may consider your tenures that vary from a week to 20 years. 


Why Should You Choose an FD? 


Once you have answered the question, “What is a fixed deposit?” you may be wondering if a fixed deposit is a right investment. A fixed deposit is a great idea if you want a risk-free investment. An FD lets you earn interest on an amount of principal deposited. This interest is earned over a tenure or a fixed period. After you place your funds in a fixed deposit, you get the principal amount with interest earned on it at the maturity date, that is, when your fixed tenure is complete. Depending on the type of FD you choose, you may withdraw from the fixed deposit before your date of maturity, but you may have to pay a penalty for doing this. 

Best fixed deposit

Features of Fixed Deposits


If you know the features and aspects related to an FD, it’s easy for you to consider the type of FD you opt for. Mentioned below are queries related to an FD: 

  • What is a fixed deposit? – A fixed deposit is a kind of deposit in which you earn interest on a fixed amount of money that you deposit for a specific tenure. 
  • Who provides it? – All non-banking finance companies and banks enable fixed deposit accounts.
  • How do you start one? – You can begin an FD online, by visiting the bank’s or the NBFC’s portal, or offline. 
  • Is there a risk? – This is an investment that is free from risk as it is governed by the rules and regulations of the Reserve Bank of India.
  • FD Types – You get a wide variety of types of FDs to match your requirements, like Standard, Tax Savings, Corporate, Senior Citizen, NRI, etc. The type of FD you select depends largely on your circumstances and distinctive financial requirements and goals. Broadly speaking, FDs in India are classified into cumulative and non-cumulative FDs. 
  • Can you withdraw funds prematurely? – it is possible to withdraw from an FD before the date of its maturity. However, depending on the norms of respective financial organizations, you may have to pay a penalty. 
  • Can you calculate the interest on an FD? – it is possible to compute the interest earned on any FD type you choose electronically, through the website of the respective financial institution (bank or NBFC) from where you opt for the FD. 

Best rate of interest for FD

Types of Fixed Deposits in India


The two major kinds of FDs available in India are non-cumulative and cumulative. This is a general categorization of FD types and according to your requirement, whether NRI, Standard, Corporate, Senior Citizen, etc, interest rates and maturity periods may vary. For instance, in an FD for Senior Citizens, interest rates offered will be higher than those offered in Standard FDs. As mentioned before, the type of FD opted for depends on the needs of the FD holder. For instance, if you want to save a certain amount of tax per year, you may go in for a tax-saving FD model. Coming back to non-cumulative and cumulative FDs, here are the differences: 

  • Non-cumulative deposits – In a non-cumulative deposit, interest on the principal amount is paid out during the tenure of the FD, on a monthly, quarterly, six-monthly, or yearly basis. This is a good idea if you need funds as an income source on a regular basis. 
  • Cumulative deposits – in this type of FD, the interest is paid out to the investor, along with the principal amount, at the time of maturity of the deposit. 


Concluding Lines


Investing in an FD is a secure way to ensure regular returns on your investment. If you are not in dire need of funds, you can opt for a cumulative deposit. According to your financial needs, you can get an FD type to match.

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