Fixed Deposit

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    Designed for risk-averse investors, fixed deposit accounts let you earn interest on the deposited amount over a fixed period of time. The interest rate usually varies from 4.50% p.a. to 8% p.a. depending on the tenure, which is usually up to 10 years. Some lenders also offer up to 0.5% additional interest rate for senior citizens.

    Features of a Fixed Deposit Account

    • Safer than other investment vehicles.
    • Lets you earn interest over a fixed period of time.
    • Flexible tenures of up to 10 years.
    • No cap on the maximum deposit.
    • Additional rates for senior citizens.

    Benefits of Fixed Deposits

    • Safer bet for risk-averse investors.
    • Earn interest on your deposits and see your wealth grow.
    • Flexible tenures.
    • Tax-saving options available.
    • Better rates for senior citizens.


    Fixed Deposit, a type of Term Deposit is popular quite a popular investment choice in India due to high interest rate (as compared to regular savings account) and low risk. The interest rate is fixed for the whole maturity period and, it’s usually considered as an extremely safe investment. The interest rates differ from bank to bank and the interest earned can be calculated Cumulative, Quarterly, Monthly and Standard.

    Benefits of FD

    • Comparatively safe investment
    • Stable and predicted returns (example 8% per annum)
    • Well suitable for conservative investors like senior citizens

    Limitations of FD

    • Low liquidity
    • Low returns because effective returns are lower considering taxes and inflation
    • Not suitable for long term wealth creation or the investors with high risk appetite like young investors in their 20s or 30s

    Currently, Senior citizens earn approximately 50 to 60 basis points higher rate of interest depending on the tenure chosen.

    The Interest earned on a bank FD with a tenure of less than 6 months, is calculated at simple interest and is considered on the number of days.

    Whereas the interest earned on FDs having a tenure of 6 months and above, is compounded quarterly i.e. is interest earned during the previous quarter is added to the principal for calculation of interest.

    For monthly interest payout option, the interest paid will be calculated at a discounted rate over the standard rate. In case you chose a quarterly payout option then interest is calculated and paid quarterly.

    You can flexibly withdraw the money from fixed deposits before maturity subject to a penalty of 1.0%.

    However, if you wish to withdraw the money only partially, then Bitola capital levies no penalty on first partial withdrawal of upto 25% of the principal amount.

    Also note, premature withdrawal is not permitted in case of a 5-year Tax Saver Fixed Deposit.

    When you bank FD matures, there are two options of rollover/renewing the FD.

    Under the principal roll-over option, the original principal is rolled over and interest is directly paid (credited) into the bank account.
    Under principal and Interest rolling option, the original amount along with the accrued interest is reinvested for the same tenure and the rate of interest applicable on the maturity.