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Why is a Fixed Deposit the Desired Form of Investment for Traditional Indians?

Posted: 20th October, 2021

Updated: 8th February, 2023

Written by -


The Fixed Deposit is an investment scheme that has been trusted by most traditional Indian families. Despite a plethora of other high-return investments options available, as per a SEBI survey in 2019, 95% of the Indian families preferred bank FDs. The biggest reason for this is the guaranteed returns. The scheme is available with varied tenure options and features make it a favored investment option.

Types of Fixed Deposit Schemes and Their Features

Normal Fixed Deposit

Here, the money is kept with the bank for a fixed tenure which may range from 7 days to 10 years. The interest rate offered in normal fixed deposits is higher than the interest offered for keeping money in the normal savings account.

Tax-Saving Fixed Deposits

If you are looking for tax-saving schemes, you can opt for tax-saving fixed deposits, which are one of the safest investment options. The tax-saving fixed deposit gets tax exemption for up to Rs 1.5 Lakh in a year as per Section 80C of the Income Tax Act. The lock-in period of the tax-saving deposit is 5 years. Be it any financial emergencies, you cannot break the tax-saving fixed deposit. Here in this scheme, you can make only a one-time lump sum deposit.

Senior Citizen Fixed Deposits

It is one of the best and safer investment options for senior citizens. The USP of senior citizen savings deposits is flexible tenure and special interest rates. Senior citizens are mainly offered two types of deposits: cumulative fixed deposits and non-cumulative fixed deposits.

In FD cumulative schemes, interest is compounded each quarter or year but credited into the account of the investor when FD gets matured. It is mostly preferred by those who are investing to grow their savings.

In FD non-cumulative schemes, interest is given to the fixed deposit holder monthly or quarterly. This scheme is preferred by those who are dependent on interest income to meet their monthly expenses. It is the best financial bet for pensioners or super senior citizens above the age of 80 years.

Flexi Fixed Deposits

These fixed deposits are linked to the bank's accounts. Under this scheme, money keeps on floating between the savings and fixed deposit account as per the financial requirement of the investor.

Who is eligible to invest in a fixed deposit scheme?

The following entities are eligible to open a Fixed Deposit account in India:

  1. 1. Citizen and resident of India
  2. 2. Non-resident Indians
  3. 3. Minors
  4. 4. Companies
  5. 5. Senior citizens
  6. 6. Partnership firms
  7. 1. Clubs and societies
  8. 2. Sole proprietors
  9. 7. Joint investors and individuals

Features and benefits that make FD investment safer for traditional Indians


  1. 1. One of the safest investment options as compared to other investment vehicles
  2. 2. You earn interest over a fixed period
  3. 3. One can keep FDs for a maximum tenure of 10 years
  4. 4. There is no cap on the maximum amount in a fixed deposit scheme
  5. 5. Special interest rates for senior citizens.

Benefits of Fixed deposit scheme

  1. 1. Low risk: It is one of the USPs of the fixed deposit schemes. The returns on FDs are not affected by the change in the market conditions.
  2. 2. Insurance: The fixed deposit is insured up to 1 lakh by the Reserve Bank of India.
  • Loan against FD: At times of financial emergencies, one can apply for a loan against the fixed deposit. The banks or financial institutions allow you to use up to 90% of the fixed deposit amount as a loan at a maximum of 2% rate of interest.
  • Regular source of income: The fixed deposit is a reliable source of income. The interest is credited to the bank account of the fixed deposit holder at frequent intervals.
  • Get tax exemptions: If you are choosing a tax-saving fixed deposit scheme, you can get a tax exemption up to Rs 1 lakh annually under Section 80C of the Income Tax Act of India.
  • Senior citizen saving fixed deposit scheme: There are high-interest rates for senior citizens. The banks offer 0.5% higher than an individual fixed deposit scheme.
  • Flexible tenures: It starts from 7 days and goes up to 10 years

Here are the FD interest rates 2021 of the top banks

Name of the Bank For general category For senior citizens
State Bank of India 2.90% -5.40% 3.40% to 6.20%
ICICI Bank 2.90% -5.50% 3.00% to 6.00%
HDFC Bank 2.90% -5.50% 3.00 % to 6.25%
Canara Bank 2.90% -5.25% 3.00% to 6.25%
Axis Bank 2.90% -5.75% 2.50% to 6.50%
Bank of Baroda 2.80% -5.25% 3.30% to 5.75%
IDFC Bank 2.75% -5.75% 3.25% to 6.25%
Bank of India 2.85% -5.05% 3.35% to 5.55%
Punjab & Sindh Bank 3.00% -5.30% 3.50% to 5.60%

Above, we have discussed the fixed deposit current interest rate of the top banks. If you are looking for the best of the corporate deposits, check for Shriram Finance cumulative and non-cumulative fixed deposit schemes that come with high credit quality, rated MAA++ by ICRA.

Shriram Cumulative Fixed Deposit

Under this scheme, the interest earned is compounded along with the principal for a fixed tenure. Here, the interest is paid once and not in installments. The Shriram Finance invites investment only in multiples of Rs 1000. The minimum amount you can invest is Rs 5000.

Shriram Non-cumulative fixed deposit

The Shriram Finance fixed deposit interest rate is credited to the fixed deposit holder’s account quarterly, monthly, annually, and half-yearly. This option is designed to offer convenience to senior citizens who are looking for income at regular intervals. For this too, Shriram Finance invites investment only in multiples of Rs 1000. The minimum amount you can invest is Rs 5000.

The best part about investing in Shriram Finance fixed deposit scheme is that the FD calculator lets you calculate the interest earned at the end of tenure to help the investor in making the right sound financial decisions. The best part about investing in Shriram fixed deposit schemes is that the interest is compounded monthly.

Apply for Shriram Finance FDs now. It is one of the best corporate deposits with an interest rate of up to 8.90%*p.a. which is inclusive of the additional interest benefit of 0.50%*p.a. for senior citizens and 0.10%*p.a. for women depositors.

Grow your savings with Shriram Finance: your one and only financial friend.

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