Types of Term Deposits available in India

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Investment instruments let your funds grow gradually. You should think about them as earning individuals. Moreover, there are many options available for different financial goals. While having diversity helps, it makes choosing the right investment tool difficult. Simple banking products like Fixed and Recurring Deposit Accounts are ideal when in doubt.

They are simple investment solutions offering low-risk growth. They are known as Term Deposits, as you hold them for a predetermined period to yield fixed returns. They get sub-categorised into specialised accounts for Senior Citizens, Women, Kids, etc. You should learn about them to get the maximum benefit.

  • Fixed Deposit

You should consider this deposit when you have considerable funds. This account puts your money to use instead of letting it sit idle. The duration, interest, and invested amount directly impact the returns. Hence, FD is the right option if you have unused surplus funds. It gets classified into:

  1. Cumulative & Non-Cumulative:You get accrued returns only upon maturity with a Cumulative Deposit. Hence, your funds remain locked for the entire term. In contrast, a non-cumulative deposit offers regular interest payouts. As a result, you get steady returns quarterly, monthly, half-yearly, or annually. This Fixed Deposit is apt for making fixed earnings.
  2. Tax-Saving: If you want tax-free returns, this account is for you. It enables you to get a tax rebate under section 80C. However, you need a deposit amount of Rs. 1.5 lakh for availing of the benefit. This comes with a lock-in of five years.
  3. Senior Citizens: It is a specialised deposit type for people aged over 60 years. The Fixed Deposit interest rates with this account are higher comparatively. It means you earn 0.5% to 0.35% interest over and above the standard rate.
  • Recurring Deposit

Unlike FDs, here you can make deposits monthly. Hence, it is apt for those who have a steady income. It lets you start investing with a small amount. This investment accumulates interest with the principal amount until maturity. Banks provide varied RDs with different terms:

  1. Senior citizens: You get to open this Recurring Deposit if you are aged above 60 years. It comes with the highest interest rates. The exact rate, however, depends on your investment. Make sure to check with the bank.
  2. Minor Deposit Account: Banks allow people under 18 years to open this deposit. But the supervision of a parent or guardian is required. The returns are either similar or higher than the regular RD.
  3. NRI accounts: Non-Resident Indians earn from their foreign and Indian savings under this deposit. It gets categorised into Non-Resident External and Non-Resident Ordinary. You also get to manage the accounts conveniently with Banking apps from abroad.


Doing extensive research over and above knowing these deposit types is wise. That way, you understand more about each deposit’s features and benefits.

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