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Time Deposits (TD) or Term Deposit or
Fixed Deposit (FD) Accounts in Banks

The Time Deposit Accounts in banks, also called Fixed Deposit or Term Deposit accounts. These accounts offer the facility of investing surplus funds to mature on a predetermined date with relatively higher rates of interest without loosing liquidity and safety of funds.

The deposits in these accounts are considered risk free investments. These accounts offer the facility of loan against the deposits andcan also be closed prematurely (with some interest penalty).

Salient features of Time Deposit Accounts in banks

ItemDescription
EligibilityIndividuals, partnership firms, private and public limited companies, HUFs/ specified associations, societies, trusts etc.
Requirements The requirements for opening of accounts by individuals are the same as mentioned under Savings Bank Accounts.

The requirements for opening of accounts by trusts, societies, partnership firms and companies are the same as mentioned under Current Accounts.

Usually Term Deposit / Fixed Deposit Accounts are maintained by banks for Saving Bank / Current Account holders only.

Minimum amountRs. 1,000/-. (may vary from bank to bank)
Maximum amountNo maximum limit
Maturity period15 days to 10 years.
InterestThe Interest Rate is related to the Maturity period of the deposit.

Usually deposits for longer periods attract higher interest rates.

The Interest Rate varies from bank to bank.

Interest can be received at monthly (discounted rate) orquarterly rests or the interest can be reinvested to be received with the principal on maturity.

In case of reinvestment of interest, it is compounded at quarterly rests.

Nomination facilityAvailable
TransferabilityTransferable from one branch of the bank to another.
Tax benefitsNot Available
Interest TaxabilityInterest earned is taxable
Overdraft / Loan facilityOverdraft/loan facility is available against security of the term / fixed deposit.
Premature paymentPremature payment is allowed subject to penalty of lower interest.
Other features
  • A Receipt or advice or pass book is issued.
  • The re-investment type fixed deposit also called Special Term Deposit is issued for a minimum period of 6 months.
  • Banks offer flexibility of changing the mode/periodicity of payment of interest from re-investment to periodical payment or vice-versa.
  • In case of matured deposits, banks permit renewal with retrospective effect i.e. from the date of maturity of the matured deposit subject to certain conditions.
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