Bank fixed deposit or bank FD is an investment instrument characterised with a higher interest rate compared with savings bank account. In a bank FD, a customer is required to deposit a fixed amount of money for a pre-defined time period. The duration for which the money is deposited in a fixed deposit enables the customer to earn an interest rate and thus generate interest income. Interest income earned on fixed deposits invites income tax, which is deducted at source. This income tax is known as TDS ('tax deducted at source'). The tenure of a fixed deposit varies from 7 days to 10 years. In case a customer wants to deposit more money in an FD account, he or she is not allowed to do so as the amount in the account is fixed until the maturity period.
Leading banks offer the option of opening fixed deposit accounts. Different banks pay varying interest rates on fixed deposits of varying tenures. An amount of less than Rs 1 crore for a five-year fixed deposit (general public) fetches an interest rate of 6.25 per cent from Kotak Mahindra Bank, 7 per cent from Axis Bank, 6.75 per cent from State Bank of India (SBI), 6.5 per cent from ICICI Bank, and 7 per cent from HDFC Bank.
(Also Read: When Your PPF Account Works Like A 5-Year Bank Fixed Deposit)
Here are the interest rates on fixed deposits offered by Kotak Mahindra Bank, Axis Bank, SBI, ICICI Bank, HDFC Bank:
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