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How are Fixed Deposits beneficial for Trust and Foundations

How are Fixed Deposits beneficial for Trust and Foundations

How are Fixed Deposits beneficial for Trust and Foundations

Types of Fixed Deposit

Fixed deposits, also known as term deposits, are financial investment instruments offered by banks and NBFCs that hold your money for a fixed tenure. In return, they pay an interest much higher than what you get in a regular savings account.

Fixed deposits have a lot of benefits, especially when it comes to nonindividual investors. Before discussing that in detail, let's look at the major types of fixed deposits and their investment requirements.

Based on the account holder type, some of the types of fixed deposits are as follows:

Individual FD:

Individual fixed deposit is the regular FD where the account holder is an Indian national aged less than 60 years. Any resident individual can open this account by submitting his/her KYC documents.

Senior Citizens FD:

For individuals aged more than 60 years, banks offer a higher interest rate on FDs. Seniors can use the monthly payout option and enjoy the golden years of their life. Also, under the 15H form declaration, the interest on these term deposits becomes tax-free, which is otherwise taxable on interest income above Rs 50000/- for senior citizens and above Rs 10000/- for others. Then there are fixed deposits that individuals do not hold. These are held in the name of companies, corporations, firms, trusts, organizations, etc. They also enjoy special interest rates on FDs.

Partnership firm FD:

Partnership firms can take fixed deposits in the name of their firm by submitting the following documents:

  1. KYC documents of the partners
  2. Specimen signatures of the partners
  3. Declaration of partnership by a partner

Public/Private Ltd. companies, Co-Operative Societies, Co-operative Banks:

These nonindividual entities can take fixed deposits in the name of their organization by submitting the following documents:

  1. Copy of Memorandum and Articles of Association/Bye-laws
  2. Copy of Resolution of Investment
  3. Specimen Signatures of Authorized Persons
  4. KYC documents of signing authorities


These entities often have unused or surplus funds that can be used to fetch some return by investing in fixed deposits. They need to submit the following documents to open a fixed deposit account.

  1. Trust deed
  2. Registration certificate
  3. Copy of Resolution of Investment
  4. Trust's PAN card copy
  5. Trust's address proof
  6. Specimen signatures of authorized persons
  7. KYC documents of the signing authorities

Other than these, there are a few more variants of the deposits mentioned above:

HUF Fixed deposits:

HUF (Hindu Undivided Family) is, by law, a family of all persons directly descended from a single member of the family, including the wives and daughters. HUF, as an entity, can open accounts, make fixed deposits in the name of the Karta (the primary member) and enjoy some tax benefits.

Unincorporated Association Fixed Deposits:

Such associations can also open fixed deposits subject to certain conditions.

Bulk Fixed Deposits:

When the amount of fixed deposits exceeds Rs. 2 crores, it is referred to as Bulk Fixed Deposit and enjoys a marginal preferential rate of return.

Benefits of Fixed Deposits:

There is a good reason why fixed deposits have been one of the most favorite investment options for the majority of Indians. Talking about the benefits of fixed deposits, here are a few of them:

Fixed Returns:

FDs are a sure option for you if you are a risk-averse investor and expect a fixed return on your investment. They offer you a fixed return percentage when you are opening your fixed deposit account. This return percentage remains constant throughout your agreed tenure even if the market rate of FDs return changes.

Power of Compounding:

Where better to see the power of compounding than in fixed deposits? Surplus funds can be invested in FDs to fetch a fixed interest, which, in reinvestment mode, keeps growing.


Though your funds are 'fixed' for an agreed period, FDs are quite a flexible product. You can withdraw your funds in the time of need, though the interest percentage, in that case, would be applied as per your effective invested tenure, which would be usually less than the longer, agreed upon tenure rate.

Hassle-Free Easy Investing:

With just you and your bank (or NBFC), and no third parties involved in between, it's a cakewalk to invest in FDs. Choose either the online option or walk in to the nearest branch of your investment provider. It's even easier if you already hold a savings or current account with them. Make your fixed deposit with Shriram Finance in just 4 simple steps from the comfort of your home.

Habit of Saving:

As Warren Buffet said, "Do not save what is left after spending but spend what is left after saving." Any kind of investment encourages the habit of saving, and fixed deposits are no exception.

Investment within the Regulatory Framework:

The investment options for trusts and foundations are primarily regulated by various laws and regulations. They are mostly restricted to bank fixed deposits, some debt funds, and a few government bonds. If the funds are to be used flexibly and you want them to be invested without hassle and readily available, fixed deposits are the best option. The surplus funds that are not currently being used but will be used later can be put in FD and allowed to accumulate interest, thus adding to an organization's savings.

Tax-Free Income for Trusts:

The interest income from fixed deposits is tax-free for trusts under section 11 of the Income Tax Act, 1961, making these fixed deposits a preferred investment option.

Risk-Free Investment:

Since the charitable foundations receive donations and pupc money for charity purposes, they cannot, under any circumstances, risk investing the money in the market. For them, fixed deposits are the best investment instruments since they offer a guaranteed return and keep the capital safe.

Regular Income:

Fixed deposits can be easily converted into a source of regular income. Just request your bank or NBFC to make the FD in monthly interest repayment mode. That way, all the interest accumulated for the month comes to your account. This is particularly important for senior citizens who can make an FD out of their retirement corpus in MIC mode and enjoy the monthly interest for their monthly expenses. It can be used in the same way by trusts and foundations too, wherein they have surplus funds and require regular income for their expenses.

If you are looking for a safe and secure option to invest funds with a high return, we’ve got you covered. Shriram Finance offers the highest rate on fixed deposits with up to 9.20%* p.a. and an additional 0.50%* p.a. for senior citizens and 0.10%* p.a. for women depositors. Shriram Finance Fixed Deposits are awarded the highest credit rating of [ICRA]AA+ (Stable)” by ICRA and "IND AA+/Stable" by India Ratings and Research.

Watch your funds grow as they stay safe with us!

Shriram completes 50 years of service!

To mark this momentous occasion, we have launched Shriram Jubilee Deposit - a 50-month investment scheme.
Invest now and earn up to 9.20%* p.a. (including 0.50%* p.a. for Senior Citizens and 0.10%* p.a. for Women)

Book a Fixed Deposit & get attractive/ high returns