Fixed deposit faqs

Choosing a particular mode of payout for the deposit depends upon the individual needs of the investor. However in terms of overall conditions, the money accumulates in a cumulative deposit and the amount will be paid only at the time of maturity.

At the end of the time period of the fixed deposit there are two options that are present for an investor. The first one is that he/she can take back the money and this would result in an inflow of funds that can be used for his/her various requirements. On the other hand, there can also be a situation where the investor might want to make another deposit out of the same amount that has been invested.

There are various time slabs available for making fixed deposits. In such a situation, there will also be different rates of interest that are offered for these time slabs. Slipping into a higher or lower time slab can increase the rate of return that is earned by the investor.

There is no particular time slab for a fixed deposit that is right for every investor. In fact, the right time slab will depend upon each individual investor after considering his/her requirements and the kind of returns that he/she wants to earn.

The documents in support of the conditions of establishing the identity and the address of the investor need to be submitted only once. In case of an existing account holder of the bank this need not be given for any deposit, however, for others it needs to be given once and then this will be applicable for future deposits made with the bank or financial institution.

There is no restriction on the opening of a fixed deposit with a particular bank or institution. The only requirement that has to be fulfilled in such a situation is that the investor has to complete the Know Your Client guidelines by submitting the various proofs of identity and address.

The risk element in a deposit is reflected in the type of interest rate that is offered on that deposit. Since banks involve relatively less amount of risk the interest rate offered here is usually lower than the other routes.

The interest rate that is offered on a fixed deposit by the borrowing institution helps provide an insight into the position of the entity. If the financial condition is very strong then the institution can raise funds by offering a low rate while a high rate has to be offered to the investors to get them to consider the investment given the slightly higher risk involved.

On the face of it, a fixed deposit might seem to be a very safe option considering that in equities there is often a loss of capital while this rarely happens in the deposit field. However, there is a risk involved in the process of investing in a fixed deposit.

There are many other institutions apart from banks that offer fixed deposit investment options for investors. Within the banking family there are public sector banks, private sector banks as well as co-operative banks with whom a fixed deposit can be made.