Bank Fixed deposit schemes are reasonable tool to enhance your investments

We learnt about financial freedom and how important it is for our life. Doing small savings can make big changes in life. Also it is important that this saved money can be invested in such tool where our principle and interest amount should be reasonably secured.

Bank fixed deposits (FDs) are the tool which is reasonably secured. In most of the fixed deposit schemes the money can be withdraw any time.

In investment market major four kind of fixed deposits are very popular.

• Fixed deposit in Nationalised banks
• Fixed deposit in Private Banks
• Fixed deposit in Co-operative Banks
• Fixed deposit in Foreign Bank

How much these banks are secured ?

In nationalised banks our money is reasonably secured although they are generating less returns on our investments due to lower interest rates. In other hand private & co-operative banks are offering higher returns than the nationalised banks but investments are not that reasonable secured like nationalised banks. Most of the nationalised banks are backed by Reserve Bank of India ( RBI) and Government of India hence investments are reasonably secured. Although in any nationalised bank a very limited amount is insured.  

Fixed deposit in Nationalised banks

Nationalised banks are most reasonably secured banks. These banks are offering many deposit & fixed deposit schemes which are offering good interest rates with fixed period. Most of the schemes are not having any lock- in- period so any time money can be withdrawn. Also few fixed deposited schemes are offering lock in period where during lock-in period money cannot be withdrawn and same time few of these lock-in schemes are offering tax benefit under section 80C of income tax.

Most of these banks are offering interest rate around 6% to 7.5%, where interest calculated quarterly compounded. The interest rates are varying based on duration of the fixed deposits.

Renowned nationalised bank which are most popular are as under

• State Bank Of India
• Central Bank of India
• Punjab National Bank
• Bank of Baroda
• Bank of India
• Union Bank of India
• Allahabad Bank
• Bank of Maharashtra
• Canara Bank
• Corporation Bank
• Dena Bank
• Indian Bank
• Indian Overseas Bank
• Oriental Bank of Commerce
• Punjab & Sind Bank
• Andhra Bank
• Syndicate Bank
• UCO Bank
• United Bank of India
• Vijaya Bank

These bank are having many branches across country. In metro city most of the branches of these banks are available. In other cities, small towns, district few bank branches are available in which State Bank of India is most popular and spared over across country.   

Fixed deposit in Private Banks

Private banks are less secured as compare to nationalised banks. These banks are offering many deposit & fixed deposit schemes which are offering good interest rates with fixed period. Even in these banks most of the schemes are not having any lock- in- period so any time money can be withdrawn. Also few fixed deposit schemes are offering lock in period where during lock-in period money cannot be withdraw and same time few of these lock-in schemes are offering tax benefit under section 80C of income tax.

Most of these banks are offering higher interest rate as compare to nationalised banks around 6.5% to 8.5%, where interest calculated quarterly compounded.

Renowned Private bank which are most popular are as under

• Axis Bank
• HDFC Bank
• ICICI Bank
• Kotak Mahindra Bank
• Karur Vysya Bank
• IndusInd Bank
• YES Bank
• IDFC Bank
• Bandhan Bank
• City Union Bank
• DCB Bank
• Dhanlaxmi Bank
• Digibank (DBS)
• Federal Bank
• Jammu and Kashmir Bank
• Karnataka Bank
• Lakshmi Vilas Bank
• Nainital Bank
• RBL Bank
• South Indian Bank
• Catholic Syrian Bank
• Tamilnad Mercantile Bank

Small Private Banks

Small Private Banks are less secured as compare to nationalised banks . These banks are having very limited branches across country. Same as other banks these banks are offering many deposit & fixed deposit schemes which are offering very good interest rates on fixed period. Even in these banks also most of the schemes are not having any lock- in- period so any time money can be withdrawn. Also few fixed deposit schemes are offering lock in period where during lock-in period money cannot be withdraw.

Most of these banks are offering higher interest rate as compare to other banks around 6.5% to 8.8%, where interest calculated quarterly or yearly compounded depending upon bank to bank. These bank are giving better returns on saving account as compare to nationalised banks. These bank are mostly targeting sections of the economy which is not served by other banks like small business units, small and marginal farmers, micro and small industries and the unorganised sector.

Below are the names of small private banks in India

• Ujjivan small finance bank
• Jana small finance bank
• Equitas small finance bank
• AU small finance bank
• Capital small finance bank
• Fincare small finance bank
• ESAF small finance bank
• North East small finance bank
• Suryoday small finance bank
• Utkarsh small finance bank.

Foreign banks having branch in India

In India many foreign banks are having their presence in India. These banks are doing business in India and not backed by RBI. Like other banks these banks are offering many deposit & fixed deposit schemes which are offering less interest rates on fixed period. Even in these banks most of the schemes are not having any lock- in- period so any time money can be withdraw. Also few fixed deposited schemes are offering lock in period where during lock-in period money cannot be withdraw.

Few of these banks are offering reasonable interest rate around 4% to 6.0%, where interest calculated quarterly or yearly compounded.

 Few foreign banks are known to us like

• BNP Paribas
• HSBC Ltd
• Barclays Bank Plc.
• Bank of America
• Standard Chartered Bank
• Citibank N.A.
• American Express Banking Corp.
• J.P. Morgan Chase Bank N.A
• DBS Bank Ltd.
• Deutsche Bank

Few others are

• Australia and New Zealand Banking Group Ltd.
• National Australia Bank
• Westpac Banking Corporation
• Bank of Bahrain & Kuwait BSC
• AB Bank Ltd.
• Sonali Bank Ltd.
• Bank of Nova Scotia
• Industrial & Commercial Bank of China Ltd.
• Credit Agricole Corporate & Investment Bank
• Societe Generale
• PT Bank Maybank Indonesia TBK
• Mizuho Bank Ltd.
• Sumitomo Mitsui Banking Corporation
• The Bank of Tokyo- Mitsubishi UFJ, Ltd.
• Cooperatieve Rabobank U.A.
• Doha Bank
• Qatar National Bank SAQ
• JSC VTB Bank
• Sberbank
• United Overseas Bank Ltd.
• FirstRand Bank Ltd.
• Shinhan Bank
• Woori Bank
• KEB Hana Bank
• Industrial Bank of Korea
• Bank of Ceylon
• Credit Suisse A.G
• CTBC Bank Co., Ltd.
• Krung Thai Bank Public Co. Ltd.
• Abu Dhabi Commercial Bank Ltd.
• Mashreq Bank PSC
• First Abu Dhabi Bank PJSC
• Emirates NBD Bank PJSC
• The Royal Bank of Scotland plc

Fixed deposit in Co-operative Banks

Most of the co-operative banks are state run banks. These banks are offering many deposit & fixed deposit schemes which are offering good interest rates with fixed period. Even in these banks most of the schemes are not having any lock- in- period so any time money can be withdraw. Also few fixed deposited schemes are offering lock in period where during lock-in period money cannot be withdraw and same time few of these lock-in schemes are offering tax benefit under section 80C of income tax.

Most of these banks are offering little higher interest rate as compare to nationalised banks around 4.5% to 7.3%, where interest calculated quarterly compounded.

Main Co-operative bank are as under

• The Andaman and Nicobar State Co-operative Bank Ltd.
• The Andhra Pradesh State Co-operative Bank Ltd.
• The Arunachal Pradesh State co-operative Apex Bank Ltd.
• The Assam Co-operative Apex Bank Ltd.
• The Bihar State Co-operative Bank Ltd.
• The Chandigarh State Co-operative Bank Ltd.
• The Chhattisgarh Rajya Sahakari Bank Maryadit
• The Delhi State Co-operative Bank Ltd.
• The Goa State Co-operative Bank Ltd.
• Gujarat State Co-operative Bank Ltd.
• The Haryana State Co-operative Apex Bank Ltd.
• The Himachal Pradesh State Co-operative Bank Ltd.
• The Jammu and Kashmir State Co-operative Bank Ltd.
• Jharkhand State Co-operative Bank Ltd.
• The Karnataka State Co-operative Apex Bank Ltd.
• The Kerala State Co-operative Bank Ltd.
• The Madhya Pradesh Rajya Sahakari Bank Maryadit
• The Maharashtra State Co-operative Bank Ltd.
• The Manipur State Co-operative Bank Ltd.
• The Meghalaya Co-operative Apex Bank Ltd.
• The Mizoram Co-operative Apex Bank Ltd. 
• The Nagaland State Co-operative Bank Ltd.
• The Odisha State Co-operative Bank Ltd.
• The Puducherry State Co-operative Bank Ltd.
• The Punjab State Co-operative Bank Ltd.
• The Rajasthan State Co-operative Bank Ltd.
• The Sikkim State Co-operative Bank Ltd.
• The Tamil Nadu State Apex Co-operative Bank Ltd.
• The Telangana State Cooperative Apex Bank Ltd.
• Tripura State Co-operative Bank Ltd.
• The Uttar Pradesh Co-operative Bank Ltd.
• The Uttarakhand State Co-operative Bank Ltd.
• West Bengal State Co-operative Bank Ltd.

Any benefits for investing in Bank Fixed deposits ?

Investment in bank fixed deposits are giving reasonably good returns on our investments. if investment will for a period of year or more, than the returns will be good. Many other advantages are making this investment tool very popular.

Advantages

• Most of the fixed deposit schemes has no lock-in-period hence in case of emergency money can be withdrawn with little interest penalty before fixed duration.
• These scheme are available in different tenures hence option for choosing the best returns are more.
• After doing fixed deposit the rate of the interest will be fixed for the duration what we have chosen and even after revision of interest rate it will be remain unchanged during fixed period.
• Interest earn on these deposit schemes are taxable and the tax deduction at source will be done by the bank on interest earned. Even the tax can be saved by submitting Form 15G & 15H to the bank at start of financial year if yearly income will not fall in tax bracket.
• If someone forget to renew the fixed deposit after fixed duration then the options are available so it can be auto renewed after tenure. In this case the interest rate will be applicable which will be at the time of renewal due date. So no lose on interest if forget to renew.
• Banks are accessible to general public 5-6 days in a week so any query related to fixed deposit can be cleared by the banks.
• Most of the banks are offering online option to do and break the fixed deposit online which is most convenient for general public.
•  Most of the banks are giving loans against these fixed deposit by charging very nominal interest rate of around 1% over FD interest rate.
• The overdraft facility is also available on fixed deposits.

Disadvantages

• If we are planning to do the investment for longer period around 5-15 years or more,  than fixed deposit is not very good option. Interest rates will be less and also the TDS will be deducted at source.
• As most of the fixed deposits are offering no lock-in period hence chances of taking out money for needs or luxury goods are more. So if we have enough money to fulfill the needs& to buy necessary items then better to invest for longer duration schemes like NSC, PPF, KVP.
• The interest rate are lower in fixed deposit schemes. 

So where to invest ?

If we are looking for secured investment option then fixed deposit of banks are the right tool to enhance our money. As returns are lower in fixed deposits as compare to long term investment schemes hence these deposits are good for contingency funds. Other than contingency fund rest of the investments are recommended in long term secured options like NSC KVP & PPF.

In fixed deposits money is any time accessible so it will give us confidence to lead peaceful life as in case of emergency, invested fund are available for withdrawal. There should be balance between long term investments and fixed deposits. To lead the life, part of the money can be saved in fixed deposit schemes as emergency funds. For surplus money this option is not recommended as this gives less returns on investments.