A fixed deposit is one of the most popular investment products in India. It is especially beneficial for those unwilling to invest in high-risk financial instruments such as equity and mutual funds.
Its greatest advantage is that it is a secured investment option that offers guaranteed returns. Thus, fixed deposits are ideal investments for senior citizens who are looking for attractive and assured returns with flexible tenures and pay-out options.
Even though fixed deposit rates in banks have fallen quite a bit in the past year, there are a few companies, like Shriram Finance, that are still offering a competitive advantage over other banks’ Senior Citizen fixed deposit scheme. These schemes provide one of the highest FD interest rates in India along with other facilities like online FD, premature withdrawal, etc.
Senior Citizen Fixed Deposits
Here are 12 things you must know about Senior Citizen Fixed Deposit Schemes in India:
1. What is a Fixed Deposit?
A Fixed Deposit (FD) is a savings instrument offered by banks or non-banking financial institutions (NBFCs) wherein you deposit a principal amount for a specified period at a fixed interest rate. You receive interest on your investment depending on the frequency of interest payment you opt for, i.e. monthly, quarterly or yearly. Once the FD matures, the principal & Interest amount is returned to you.
2. Is Senior Citizen FDs Safe?
Fixed deposits offered by companies are rated by credit rating agencies so that investors can make a wise decision before zeroing in on one. One should always go for companies that enjoy high ratings like ‘AAA’ or similar.
Shriram FD is accredited with [ICRA]AA+ (Stable)” by ICRA and "IND AA+/Stable" by India Ratings and Research. This rating suggests the company does not default on the payment of the principal as well as the interest amount.
3. Who is Eligible to Invest in a Fixed Deposit?
Eligibility criteria vary from one company to another.
To avail the benefits of the Shriram Finance Fixed Deposit scheme, you must belong to any of the following categories:
- A resident individual
- Hindu Undivided Family
- Trust and foundations
- Unincorporated individuals
To avail unique benefits under senior citizen FD, you must be 60 years or older.
4. What is the Minimum Amount that I can put in a Fixed Deposit Scheme?
The amount you can put in a fixed deposit varies according to the company or bank. Shriram Finance, you can start investing with a minimum deposit of just Rs. 5,000. Deposits will be accepted in multiples of Rs. 1,000.
5. What is the Duration Tenure of Investment in an FD Account?
Then tenure of an FD account varies from one company to another. The tenure usually ranges from 7 days to 10 years. Kindly note that deposits with shorter tenure are offered a lower rate of interest than those with a longer tenure.
Shriram Finance FD lets you open a fixed deposit with a minimum tenure of 12 months to a maximum tenure of 60 months.
6. How much Interest will I Gain on my Investments?
Different companies offer different senior citizen fixed deposit interest rates. If you are planning to invest in Shriram Finance deposits, the company provides both cumulative and non-cumulative fixed deposits and provides the best FD interest rates for senior citizens.
Interest rates, including senior citizen FD rates, are as follow:
- Cumulative Deposits: Interest rates range from 7.53%* to 8.27%* p.a. The effective yield ranges from 7.80%* to 10.21%* p.a.
- Non-cumulative Deposits: Interest rates range from 7.53%* p.a. to 8.27%* p.a. at monthly rests for all five deposit tenures. Different standards are applicable for monthly, quarterly, half-yearly, and annual payment schemes.
- Special Fixed Deposit Rates for Senior Citizens: Senior citizens will receive an additional 0.50%* p.a. rate of interest on any chosen FD product.
With Shriram Finance FD calculator, you can also calculate the interest earned on your income and calculate the maturity amount easily!
7. How Will I Receive the Interest Amount on FD?
The interest amount is generally credited to the given savings account on a monthly, quarterly, or yearly basis.
8. How are Fixed Deposit Schemes Taxed?
According to the Income Tax Section 80TTB, senior citizens can claim tax benefits on interest income up to Rs. 50,000 on deposits held with banks, co-operative banks, or post offices. If you are a senior citizen, you can easily claim a deduction of up to Rs. 50,000 as a deduction from total gross income before the levy of tax.
Also, no TDS will be deducted from the interest payments made up to Rs. 50,000 in a financial year. To avoid tax deduction, senior citizens can submit Form 15H to the bank.
9. Can I Avail Loan on My FD Account?
Most banks and financial institutions allow you to take a loan against the fixed deposit amount. The maximum loan sanctioned is usually a certain percentage of the principal deposit. This percentage can vary across companies and banks.
Although the rate of interest that you pay on the loan amount is generally 2% higher than the interest rate paid on your fixed deposit, it is still usually lesser than the amount you would pay if you opt for a personal loan.
If you are opening an account with Shriram Finance, the loan will be sanctioned to any depositor who has a live fixed deposit account with the company that is more than three months old. However, granting of the loan will be at the sole discretion of the company.
10. Can I Break a Fixed Deposit before Maturity?
In case you require funds urgently, you can avail premature withdrawal from your fixed deposit account. Most companies give you an option to either break your FD or partially withdraw it. However, you might be charged a small fee for premature withdrawal.
11. Is Nomination Facility Available for Fixed Deposit Schemes?
In case of unforeseen circumstances, companies do offer a nomination facility for senior citizen fixed deposit schemes. In the event of the death of the depositor, the nominee can claim the entire sum with interest on the maturity of the scheme. While filling the form, do make sure to add in the nominee details correctly. This will ensure that your legal heirs do not have to go through any roadblocks to claim the money.
On account of the death of the account holder, the nominee has to submit a valid death proof to collect the deposit amount.
12. Can I Open an Online Deposit Account?
SCUF fixed deposits offer customers the facility to open an online FD account to ensure a faster and hassle-free experience. No more standing in long queues!
There you go! Hopefully, the article answered all your queries related to senior citizen fixed deposit schemes. With the ability to yield a higher interest rate than your savings account, fixed deposit is a good investment scheme, especially for senior citizens who are looking to fast track their savings. Don’t wait - invest in FD today and enjoy assured returns on your investment.