Walk into any bank or NBFC, ask about fixed deposits, and you'll quickly realise there isn't just one kind. There's cumulative, non-cumulative, short-term, long-term, for senior citizens, for NRIs, and a few others. Each one is designed for a slightly different financial situation — and choosing the wrong type for your goals can mean either missing out on returns or ending up with an income structure that doesn't suit your actual needs.

This guide breaks down the main types of fixed deposits in India in plain language — what each one is, who it suits, and what you should think about before choosing.

1. Cumulative Fixed Deposit: Save Now, Receive Everything at Maturity

Think of this as the "set it and forget it" option.

You deposit your money, the financial institution adds interest to it at a fixed frequency, and by the time your FD matures, you receive everything — your original deposit plus all the interest that's built up over the tenure — in one lump sum.

With the Shriram Unnati Fixed Deposit, interest on cumulative deposits is compounded monthly. This means every month, that month's interest is added to your total, and the next month's interest is calculated on the new, slightly larger amount. Over time — especially over 3, 4, or 5 years — this adds up meaningfully without you doing anything.

Suitable for: Anyone saving towards a specific goal — a home down payment, a child's education, a retirement corpus — who doesn't need the interest income during the deposit period.

2. Non-Cumulative Fixed Deposit: How to Create a Regular Income Stream

This one works differently. Instead of holding on to the interest until maturity, the institution pays it out to you at regular intervals — monthly, quarterly, half-yearly, or yearly. You choose the frequency when you open the FD.

Your original deposit comes back at maturity. The interest, you've been receiving all along.

Suitable for: Retirees, homemakers, freelancers, or anyone who needs a predictable income stream to cover regular expenses. If your salary or pension doesn't fully cover your monthly needs, a non-cumulative FD can bridge that gap reliably.

With the Shriram Unnati Fixed Deposit, all four payout frequencies are available. Rates go up to {{FD}} (inclusive of {{FD_Senior}} for senior citizens and {{FD_Women}} for women depositors).

Check your chosen payout amount using the Shriram FD Calculator

3. Fixed Deposit for Short-Term: When Flexibility Matters More than Rate

Any FD with a shorter tenure — at Shriram Finance, the minimum is 12 months — falls into this category. Short-term FDs are useful when you know you'll need the money within a year or two, or when you expect interest rates to rise and want the option to reinvest at a better rate when this one matures.

They typically earn a slightly lower rate than longer-tenure FDs. With Shriram Finance, a 12-month cumulative FD earns 6.75%* p.a. for a general investor. Still meaningfully higher than a standard savings account.

Suitable for: Near-term goals, emergency corpus building, or investors who prefer flexibility over committing to a 4–5 year lock-in.

Also read: Everything You Need to Know About Fixed Deposits in India

4. Fixed Deposit for Long-Term: Making Compounding Work Harder Over Time

A longer tenure — typically 36 to 60 months — earns a better rate and gives monthly compounding more time to work in your favour on a cumulative FD.

With Shriram Finance, a 36–60 month cumulative FD earns 7.25%* p.a. for a general investor. The longer your money stays, the harder that compounding works — and the larger the final payout relative to what you put in.

Suitable for: Investors with a specific 3–5 year goal, or those who want to lock in a good rate before the RBI's rate cycle turns downward.

5. FDs for Senior Citizens and Women Depositors

This isn't a separate FD product — it's the same Shriram Unnati Fixed Deposit with an additional interest benefit for investors aged 60 and above. Senior citizen depositors earn an extra {{FD_Senior}} on top of the standard rate.

On a non-cumulative FD, this translates into a higher monthly, quarterly, half-yearly or yearly payout. On a cumulative FD, it means a larger lump sum at maturity. Either way, the benefit is real and compounds over the tenure.

Women investors also receive an additional {{FD_Women}} with the Shriram Unnati Fixed Deposit. If you're a woman and a senior citizen, both benefits apply simultaneously — bringing the maximum rate to {{FD}}.

Suitable for: Retired investors supplementing pension income (non-cumulative) or building an additional corpus for later years (cumulative), and women depositors looking to add stable investment products to their portfolio or homemakers looking for a steady income.

7. FDs for NRIs

Non-Resident Indians can invest in fixed deposits through NRO or NRE accounts. With Shriram Finance, NRI fixed deposits are available through the offline route only, for a maximum tenure of 36 months.

NRE FDs are opened with money earned outside India; the interest and principal are both repatriable. NRO FDs are opened with income generated in India — rent, dividends, or other Indian sources — and repatriation is subject to applicable conditions.

Suitable for: NRIs who want to keep a portion of their wealth invested in India.

8. Corporate Fixed Deposits (NBFC FDs)

When you open an FD with an NBFC like Shriram Finance instead of a bank, it's sometimes called a corporate FD. The mechanics are the same — fixed rate, defined tenure, cumulative or non-cumulative — but NBFC FDs tend to offer higher interest rates than bank FDs for comparable tenures.

The relevant check before investing in any corporate FD is the credit rating. Shriram Finance is rated: {{CRISIL_Ratings}}.

Which Type of FD Matches Your Situation? A Quick Reference

The Shriram Unnati Fixed Deposit covers most of these situations — minimum ₹5,000, tenures from 12 to 60 months, cumulative and non-cumulative options, with rates up to {{FD}}.

Decided which type fits your situation? Open your Shriram Unnati Fixed Deposit today.  Still working out the numbers? Use the Shriram FD Calculator first

FAQs

1. What is the difference between cumulative and non-cumulative FD?

In a cumulative FD, interest is added to the principal and paid at maturity. In a non-cumulative FD, interest is paid out regularly during the tenure. This frequency of compounding for a cumulative FD is decided by the financial institution and can be monthly, quarterly, half-yearly or yearly. At Shriram Finance, the interest compounds monthly.

2. Which FD is best in India?

There's no single answer — it depends on what you need the money to do. If you're saving for a future goal and don't need income during the tenure, a cumulative FD with a longer tenure earns the most. If you need regular income now, a non-cumulative FD with monthly or quarterly payouts fits better. Start by deciding your goal and timeline, then match the FD type to that — not the other way around.

3. How does a corporate FD differ from a bank FD?

The structure is identical — fixed rate, defined tenure, cumulative or non-cumulative. The main differences are that corporate FDs (offered by NBFCs) typically offer higher interest rates than bank FDs. Bank FDs are covered by the DICGC deposit insurance, which protects deposits up to ₹5 lakh. For an NBFC FD, the relevant credibility measure is the credit rating from independent agencies. An NBFC rated AAA by CARE, CRISIL, ICRA, and India Ratings — as Shriram Finance is — has cleared the most rigorous domestic credit assessment available.

4. What benefits do senior citizen investors get on FDs with Shriram Finance?

Senior citizens — investors aged 60 and above — receive an additional {{FD_Senior}} over the standard rate on the Shriram Unnati Fixed Deposit. This applies across all tenures and both cumulative and non-cumulative schemes. Women investors who are also senior citizens receive an additional {{FD_Women}} on top of that, bringing the maximum combined rate to {{FD}}.

5. What does a flexible FD mean?

A flexi or flexible FD is a bank product that links your FD to a savings account — excess savings are automatically swept into an FD at a higher rate, and funds are swept back when your savings balance drops. It offers the interest advantage of an FD with the accessibility of a savings account. This product is not offered by most NBFCs, including Shriram Finance. If liquidity is your primary concern, a short-tenure FD with a clear maturity date and competitive interest rates is typically a more structured alternative.