Investing for Beginners. .

       Customer Information

   The customer information collected from the customers shall not be used for cross selling of services or products by the Bank, their subsidiaries and affiliates. If the Bank proposes to use such information, it will be strictly with the consent of the account holder, obtained at the time of account opening or subsequently.

     Secrecy of Customer’s Accounts

The Bank shall not disclose details/ particulars of the customer’s account to a third person or party without the expressed or implied consent from the customer. However, there are some exceptions, viz. disclosure of information under compulsion of law, where there is a duty to public to disclose and where interest of the Bank requires disclosure.

     Insurance Cover for Deposits

   All bank deposits are covered under the insurance scheme offered by Deposit Insurance and Credit Guarantee Corporation of India (DICGC) subject to certain limits and conditions. The details of the insurance cover in force will be made available to the depositor. 

      Redressal of Complaints and Grievances

 Depositors having any complaint/ grievance with regard to services rendered by the Bank has a right to approach authority(ies) designated by the Bank for handling customer complaint/ grievances. The details of the internal set up for redressal of complaints/ grievances will be displayed in the branch premises. The branch officials shall provide all required information regarding procedure for lodging the complaint.  

When you deposit a certain sum in a bank with a fixed rate of interest and a specified time period, it is called a bank Fixed Deposit (FD). At maturity, you are entitled to receive the principal amount as well as the interest earned at the pre-specified rate during that period. The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the maturity period of the FD and the amount invested. The interest can be calculated monthly, quarterly, half-yearly, or annually, and varies from bank to bank. They are one the most common savings avenue, and account for a substantial portion of an average investor's savings. The facilities vary from bank to bank. Some services offered are withdrawal through cheques on maturity, break deposit through premature withdrawal, and overdraft facility etc.

INVESTMENT OBJECTIVES

How Suitable Are Fixed Deposits For An Increase In My Investment?

While a Bank FD does provide for an increase in your initial investment, it may be at a lower rate than other comparable fixed-return instruments. Since capital appreciation in any investment option depends on the safety of that option, and banks being among the safest avenues, the increase in investment is modest.

Are Fixed Deposits Suitable For Regular Income?

A Bank FD does not provide regular interest income, but a lump-sum amount on its maturity. Since the lump-sum amount depends on the rate of interest, currently between 4 and 11 per cent, Bank FDs are not suitable for regular income.

To What Extent Does a Bank FD Protect Me Against Inflation?

With a fixed return, which is lower than other assured return options, banks cannot guard against inflation. In fact, this is the main problem with Bank FDs as any return has to be calculated keeping inflation in mind.

Can I Borrow Against Bank FDs?

Yes, in some cases, loans upto 90 per cent of the deposit amount can be taken from the bank against fixed deposit receipts.

RISK CONSIDERATIONS

How Assured Can I Be Of Getting My Full Investment Back?

Almost 100 per cent. Bank Deposits are the safest investment option after post-office schemes since the banks function according to the parameters set by the Reserve Bank of India (RBI), which frames regulations keeping in mind the interest of the investors.

How Assured Is My Income?

There is no regular income in this option as the payment is made in one lump sum after the expiry of the tenure of the Bank Fixed Deposit.

Are There Any Risks Unique To Bank FDs?

Not really. Since all the banks operating in the country, irrespective of whether they are nationalised, private, or foreign, are governed by the RBI's rules and regulations, which give due weightage to the interest of the investor, there is little chance of an investment in a bank deposit going under. In fact, till recently, all bank deposits were insured under the Deposit Insurance & Credit Guarantee Scheme of India, which has now been made optional. Nevertheless, bank deposits are still among the safest modes of investment. The thing to consider before investing in a FD is the rate of interest and the inflation rate. A high inflation rate can simply chip away your real returns. So, it is critical to take the inflation rate into consideration to arrive at the real rate of interest.

Are Bank FDs rated for their credit quality?

No, Bank FDs are not commercially rated. Since Bank FDs are extremely secure, the only thing to check out while investing in one is the interest rate being offered and your convenience.

BUYING, SELLING, AND HOLDING

How Do I Open A Bank Fixed Deposit Account?

You can get a bank FD at any bank, be it nationalised, private, or foreign. You have to open a FD account with the bank, and make the deposit. However, some banks insist that you maintain a savings account with them to operate a FD.

What Is The Minimum Investment And The Range Of Investment for Bank FDs?

Minimum investment in an FD varies from bank to bank. It could be as low as Rs 500 in case of nationalised banks, and could go up to Rs 10,000 in private banks and Rs 50,000 in some foreign banks. Banks are free to offer interest rates on their FDs, depending on the interest rate scenario, the government's monetary policy, and their own money supply position.

What Is The Duration Of a Bank FD?

Bank FDs have varying duration: from 15 days to more than 5 years. Depending on their duration, the interest also varies.

Can Bank FDs Be Sold In The Secondary Market?

No, a bank FD can only be encashed from the bank it was taken from.

a.      The Bank before opening any deposit account will carry out due diligence as required under “Know Your Customer” (KYC) guidelines issued by RBI and or such other norms or procedures adopted by the Bank. 

 b.      The account opening forms and other material would be provided to the prospective depositor by the Bank. .

 c.      For deposit products like Savings Bank Account and Current Deposit Account, the Bank will normally stipulate certain minimum balances to be maintained as part of terms and conditions governing operation of such accounts.  Failure to maintain minimum balance in the account will attract levy of charges as specified by the Bank from time to time.  

  d.     The due diligence process, while opening a deposit account will involve satisfying about the identity of the person, verification of address, satisfying about his occupation and source of income.

e.      In addition to the due diligence requirements, under KYC norms the Bank is required by law to obtain Permanent Account Number (PAN) or General Index Register (GIR) Number or alternatively declaration in Form No. 60 or 61 as specified under the Income Tax Act/ Rules.  

f.      Operation of Joint Account: The Joint Account opened by more than one individual can be operated by single individual or by more than one individual jointly. The mandate for operating the account can be modified with the consent of all account holders.  k.       The joint account holders can give any of the following mandates for the disposal of balance in the above accounts:

g.   The deposit accounts may be transferred to any other branch of the Bank at the request of the depositor.       

Interest income from a Bank FD qualifies for exemption under section 80L, which means that interest income upto Rs 9,000 is tax-exempt.