Bank deposits are safe investments as all bank deposits are insured upto a maximum of INR 100,000 under the Deposit Insurance & Credit Guarantee Scheme of India. Banks are subject to control and regulated by the Reserve Bank of India. They offer various types of deposits, depending on the needs of the customer. Bank deposits are preferred more for their liquidity and safety than for the returns thereon. Interest is paid by banks on regular intervals or at maturity of FD as selected by customer.
Generally the Interest rates paid by Private Banks on deposits are higher than Interest rates of Public Sector Banks. Also banks provide facility of auto renewal of FDs to avoid loss of interest to customers. It is possible to get loans or overdraft facility of up to 75 – 90% of the deposit amount from banks against fixed deposit receipts.
Banks will generally ask for your PAN no. while opening your Bank account and/or accepting deposits. Interest on Saving bank account is exempt from Income tax to an extent of INR 10000 on annual basis u/s 80TTA. If the interest paid by bank on Saving Bank is higher than 15000, Banks will deduct TDS while paying interest. A Customer can submit form 15G/H to avail benefit of TDS exemption.
Banks generally offer higher interest rates of 0.5%-1% p.a. to Senior citizens on the Bank deposits.
1. Savings Bank Account
Simply click on the SIGN UP, and view Interest on Saving Account offered by different banks
2. Bank Fixed Deposit (Bank FDs)
3. Special Bank Term Deposit Scheme (Tax Saver Fixed Deposits)
Simply click on the SIGN UP, and start comparing Interest on FDs offered by different banks
4. Recurring Deposit Account
5. Corporate Fixed Deposits
These days a number of Corporates accept Fixed Deposits from Individuals on an ongoing basis as part of their overall Borrowing Program. For investor, Corporate Fixed deposits are one of favourite investment options, as they give investors the assurance of fixed returns with higher interest rates as compared to Bank FDs
Interest on corporate fixed deposits are paid on a monthly / quarterly / half yearly / yearly / maturity basis. It is paid either through cheque, or through the Electronic Clearing System (ECS). Tax Deducted at Source (TDS) is deducted if the interest earned on a corporate fixed deposit exceeds Rs. 5,000 in a financial year. A user can give form 15G/15H as in case of Bank FDs to claim exemption from TDS
Restrictions on acceptance of Fixed Deposits by manufacturing companies:
A Non-Banking Non-Finance Company (Manufacturing Company) can accept fixed deposits subject to the following limits:
Manufacturing companies can accept fixed deposits for a duration of 6 months to 3 years.
Restrictions on acceptance of Fixed Deposits by NBFCs:
A NBFC can accept deposits up to the following limits:
NBFCs can accept deposits for a duration of 1 year to 5 years. Housing Finance Companies can accept deposits for a period of 1 year to 7 years.