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How to Select the Most Effective Fixed Deposit Scheme

How to Select the Most Effective Fixed Deposit Scheme

How to Select the Most Effective Fixed Deposit Scheme

Fixed Deposit scheme or FD is an investment product offered by banks and a few other financial institutions. It is one of the age-old investment schemes in India which has not lost its relevance even today despite booming stock markets. 

This is because, in stock markets, there is a risk involved. While on the contrary, fixed deposits offered assured returns with zero risks. These days, fixed deposits are offering returns that are close to what many mutual funds are offering, and the risk in mutual funds is significantly higher.

In a nutshell, guaranteed returns coupled with no risk make FD a lucrative asset class. This article will introduce you to the best fixed deposit scheme and what parameters to look for while choosing a fixed deposit scheme. If you are wondering how to choose the best FD plan in 2021, this article is for you. Here it goes:

Interest Rate:

The foremost parameter to look for while comparing different FD schemes online is the financial institution that is giving the highest rate of interest for fixed deposit. Interest rate signifies the interest amount you will get on the principal amount deposited at the maturity of your FD. This interest is why you decide to lend your money to the bank. 

1. Why is Interest Rate Important?: There is no point in taking a certain fixed deposit scheme offering a 5% interest rate in an economy where the inflation rate is 6%. This will reduce the purchasing power of the money you deposited as you failed to beat inflation. 

2. What Should Depositors Do?: Thus, prefer choosing the highest FD return plan offering the best interest rate. As a rule of thumb, avoid banks offering less than 7.06%*p.a. interest rates since this parameter is your sole return on investment (ROI). Also, prefer banks giving a premium in interest rates for retired people or senior citizens as this is the best FD plan for retired people.  

Flexible Tenor:

The next important parameter is the tenor or the lifetime of a fixed deposit scheme which defines your lock-in period. The best fixed tenure plans are the ones that offer flexible tenor options from 6 months to 60 months or more. A good financial institution will suggest tenor options based on assessing your financial goals and investment amount. The investment products of such institutions will go down in history as the best corporate FD in 2021.

Cumulative FD vs. Non-Cumulative FD:

These are basically two variants of FD, differentiated by interest payout frequency. Cumulative FD pays interest once at the end of the maturity period; till then, the interest is compounded into one big amount. On the flipside, non-cumulative FD gives out interest at regular intervals i.e. monthly, quarterly, half-yearly, or yearly.

1. What Should You Choose?: Depending on your need for money, you can choose any of these types. The best fixed deposit scheme is the one that gives you both these options. Cumulative FD schemes are ideal for depositors who do not feel the need for liquid cash for the entire tenor of their FD.

2. What If You’re Retired?: Being someone who is now retired, if you want regular payouts at regular intervals, then it is better to go for non-cumulative FD schemes out there. In a nutshell, a non-cumulative FD product is the best FD plan for retired people. 

Hassle-Free Application Process:

You should ideally choose a financial institution with a completely paperless application apart from looking for the highest interest rate for fixed deposit. The FD provider should have an online application process that will allow you to start a fixed deposit while relaxing on your couch. 

You would not want to visit their branch office and physically fill a fixed deposit form and manually make the deposit offline. Besides, even if you are a working individual, you would not have to take a day off from your work to visit the bank’s branch, not in the current technology-driven era. A highest FD return plan with a completely online process is all you need to see your savings multiply over the years. 

Minimum Documentation:

Apart from the online application and monitoring process, you will also have to make sure that the financial institution is asking for bare minimum documents from you. The best fixed tenure plans are the ones that demand lesser documents from the depositors and make life easy for them. 

1. Necessary Documents: Make sure they restrict themselves to asking for basic ID proofs of the depositor, one document for address proof, one or two photographs etc. 

2. Business Documents: If it is a corporate approaching for an FD, then the basic business financials, registrar of companies document, certificate of incorporation etc. Such banks or financial institutions will undoubtedly emerge as the best corporate FD in 2021.

Premature Withdrawal:

One of the key components of any FD is the facility of premature withdrawal, which allows a depositor to terminate his fixed deposit scheme before its maturity. If you want to want the best fixed deposit scheme provider in the country, choose the one offering this facility of premature withdrawal. 

1. Penalty Charges: Additionally, the penalty on premature withdrawal should also be least among other financial institutions. There is simply no point in going for an FD scheme that is offering no to the very low-interest amount on a premature withdrawal before its maturity. 

2. Lock-in Period: The financial institution offering fixed deposits can reduce the interest rate, which was agreed upon initially, but it should not be the case that they will not pay any interest amount whatsoever. There are certain emergencies wherein you need to terminate your FD. In that case, you should get some interest, if not complete, if the depositor has surpassed the lock-in period. This is how you will be able to get the best FD plan for retired people. 

Financial Institution’s Credibility:

Though it’s not a risky investment, there are still chances (though low) of the financial institution defaulting on its repayment. Thus, you should do your research to find a credible FD provider and one of the best ways to check for their credit ratings. 

There are many credit rating agencies in India like -CRISIL, ICRA, CARE, etc., who give these financial companies a rating. Apart from the highest rate of interest for fixed deposit, you should also research this aspect of credibility for your deposit security. 


This was all about the best fixed deposit scheme and its parameters to get an ideal fixed deposit product. As a depositor, you should aim to get the highest interest rate on your FD with a premature withdrawal facility with the lowest penalty. Decide on the lender based on the application and documentation process. To know more about the highest FD return plan, you can visit the Shriram Finance here. We are known to provide the best in class service with the facility of premature withdrawal.

Shriram Finance does NEFT for interest payout in case of a non-cumulative FD; thus you would not have to visit their office to get your money, making it the best FD plan for retired people. There is a fixed deposit calculator, which allows you to compute the interest amount you will be getting on maturity based on the amount invested. 

The additional interest rate of 0.50%* p.a. to senior citizens is the highest in India’s financial services space. If you any questions on how to choose best FD plan in 2022, please reach out to us.

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