A Fixed Deposit (FD) is one of the most popular types of investment because it offers relatively stable returns and helps preserve capital over a fixed tenure. But there are rules and regulations you need to keep in mind.

Saving money through an FD is a reliable option and an intelligent way to grow your finances. Knowing all the rules and regulations surrounding an FD can help you get the best benefits from the investment. Collecting a lump sum of money and putting it away in a bank or Non-Banking Financial Company (NBFC) is one of the easiest ways to start saving.

With FD, you can get reliable returns, and a flexible tenure for your investment, and you will also have the option to close your FD in times of emergencies. You can also use the Shriram FD calculator to know the maturity amount for the tenure that you require. Here are some FD rules and regulations you have to keep in mind while investing in this scheme:

1. Insurance

FDs are widely used savings instruments that are generally considered lower risk compared to market-linked investments.

Fortunately, several banks and NBFCs offer insurance for both principal and the interest amount held by them.

2. Loan facility on an FD

Some banks and NBFCs offer loans against FDs. This sort of loan is usually in the form of an overdraft facility. The amount extended for a loan depends on deposit size and tenure. You can choose the term of your loan if it falls within the duration of your fixed deposit. Pre-mature withdrawal of your limited deposit amount will not be possible.

3. Penalty on early withdrawals

This FD rule is quite popular and may sometimes be why a person avoids investing in a fixed deposit. You can easily withdraw your FD amount in the case of an emergency, but premature withdrawal usually incurs a penalty. The penalty amount usually depends on the bank or NBFC in which you have deposited your money.

The penalty may cause you to lose a significant portion or all of the interest amount you were supposed to receive on maturity. This is why you should avoid breaking your FD before the maturity day.

Conclusion

Now that you know the rules, you can open an FD to save for future goals. This investment scheme comes with a pre-fixed interest rate. Keeping updated with the latest FD interest rates of your preferred banks and NBFCs can help you make the best investments.

You can easily open a Shriram Fixed Deposit and review the available tenure options and applicable interest rates before investing. After the deposit has matured, renewal options may also be available as per the institution’s policies.

FAQs

What happens to FD after maturity?

After maturity, the fixed deposit amount along with interest is credited to the linked bank account or renewed as per the depositor’s instructions. Investors can either use the amount or reinvest it into another FD.

What is the limitation of a fixed deposit?

Although an FD can be readily withdrawn, the penalty can be considered one of the limitations of investing in this scheme.

Can we withdraw money from a fixed deposit before maturity?

You can’t withdraw a portion of the amount deposited. If you require the amount in the deposit for an emergency, you can prematurely withdraw the amount, but a penalty is likely to be levied on your FD.

What is the minimum period for a fixed deposit?

You can invest in an FD for a minimum period of 12 months. Shriram Unnati Fixed Deposit offers a tenure of 12 to 60 months. This period may vary according to the bank or NBFC of your choice.