Classification of
deposit accounts
On the basis of purposes served, the
deposit accounts can be classified
as follows:
Fixed Deposit Account
It is also known as a term deposit
account. Money deposited in fixed deposit account ranges for a period
starting from 30 days to more than 5 years At the end of the specified period,
the depositor may either withdraw the money or renew the
deposit further for a specified period. Banks pay interest on fixed deposit
depending upon the period for which the deposit is kept with the
bank. The rate of interest on fixed
deposit account normally ranges from
6% to 12% per annum. People who want safety, prefer a reasonable
rate of return and do not believe in taking a risk, go for fixed deposit
accounts.
For 3 month given below
For 3 month given below
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| For 3 month given below |
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| 5 years Fixed Deposit
Rate of interest on
fixed deposit.
The rate of interest and other terms
and conditions regulating fixed deposits are determined by the Reserve Bank of
India for all commercial banks. The Reserve Bank of India keeps on revising the
rate of interest from time to time. The rate of interest currently applicable
on fixed deposits are as follows.
.
Payment of interest
Though the interest is payable on the
maturity of fixed deposit account, banks may pay interest quarterly or half
yearly also. In case the bank pays interest before maturity, the amount of such
interest is transferred to depositor’s saving bank account.
Normally the interest on fixed deposit is compounded in case the depositor does
not withdraw the interest. If the fixed deposit is renewed, the interest on it
is also compounded. When the depositor fails to claim the deposit on the due date and later on desires to renew the
deposit, the bank may renew it from the date of maturity. In such a situation
the depositor does not lose the interest.
Payment of fixed
deposits before the date of maturity
Fixed deposits are
normally payable on maturity. In case the depositor requires the money before
the due date, he or she makes a request to the bank for its payment. The bank
may consider such a request and make payment of the fixed deposit. When the
payment of a fixed deposit is made before the date of maturity, the depositor
loses interest which is 1% less compared to the rate applicable for the period.
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Fixed
deposit in joint names
Fixed deposits
may be made in the joint names of two or more persons payable to
either or survivor. The money on such deposit is payable to either of them
or a survivor at the time of maturity.
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