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Q. What is a Fixed Deposit (FD)?
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Fixed Deposit is an account maintained with a Bank, HFC (Housing Finance Company),
Corporate, NBFC (Non Banking Finance Company) or any other entity wherein the money
is given at a particular rate of interest for a particular period of time. |
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Q. On what factors does the interest rate on the FD depend?
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The interest rate on FD varies depending upon the tenure and amount of principal. |
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Q. What is the tenure of FD?
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The time period for which the FD is made is called the tenure. |
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Q. What are the various tenures available?
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The tenures varies from 1 year to 7 year (12 months to 84 months)
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Q. When is the interest added?
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Interest is paid as per the scheme chosen for the FD. In case of Monthly / Quarterly
/ Annual Income Plan, interest is paid on a monthly/quarterly/annual basis. In case
of Cumulative scheme, compound interest is paid at the end of the term of FD along
with principal. |
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Q. What is compounding in FDs?
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In case of Cumulative Scheme deposits, interest accrued is added back to the principal
at the end of every month/quarter/half-year/year depending upon the compounding
factor. Cumulative scheme of is compounded annually. |
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Q. What are the documents required?
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The documents required (apart from duly filled FD Application Form) are the proof
of residence and PAN No. If a depositor is not assessed for tax then you will have
to fill Form No.60 as per the regulations. |
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Q. Is the PAN mandatory for making an FD account?
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Yes, if the investor does not have PAN and is not assessed for tax then he/ she
has to fill Form No.60 according to the guidelines.
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Q. Can I open different FD accounts in the name of same entity?
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Yes, you can open several accounts with the same name but the interest income will
be clubbed. |
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Q. How can I redeem my deposits?
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The Deposit Receipt duly discharged with a revenue stamp should be surrendered to
the company on maturity for the repayment of the principal amount . This must be
done at least a month before the maturity to enable the company to renew or refund
the deposits as the case may be. |
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Q. Can I have a FD in a joint account?
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Yes, you can have the FD in the joint account mode. A maximum of 3 joint holders
for a deposit are permitted as per the NHB guidelines. |
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Q. What is 'either or survivor'?
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In this facility, any one of the account holders (if it is in a joint name) can
stake a claim to the money deposited and operate the account without the signature
of the other account holder(s). Moreover, if one of the account holders has expired
without any nomination, the other account holder can claim the funds on maturity. |
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Q. What is a joint or survivor?
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In this case, both account holders have to be present at the time of withdrawal
of deposits and their signatures have to be present on the cheque. In the case of
one account holder expiring, the other account holder(s) have to furnish the death
certificate of the expired account holder in order to claim the funds on maturity. |
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Q. What is rollover? |
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If the FD matures and the investor does not claim the money then he/ she can renew
deposit for the same or different tenure depending on the interest rates. |
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Q. What is the mode of getting payment after redeeming a FD?
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The payment after maturity of the FD is paid in the form of cheque/pay order/demand
draft/direct credit into the depositor’s bank account. |
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Q. What is nomination?
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Nomination is a form of instruction by an investor, directing the company to pay
the matured fund amount to a particular person in case the original account holder
expires. |
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Q. Is FD transferable?
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No, the FD is not transferable. |
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Q. What if I change my address etc. during the term of deposit?
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You just have to write an application informing of any change. This must be signed
by all the account holders |
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Q. When is the TDS deducted in FDs?
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If the interest on the FD exceeds Rs.5000 then the company deducts TDS while making
the payments. |
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Q. Do companies club interest on different FDs in calculation of interest for TDS
purposes?
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Yes, it is mandatory for the companies to club the interest income on all the accounts
of the account holder and deduct TDS if interest is more than Rs. 5000. The Income
Tax is deducted at source in accordance with the Section 194-A of the Income Tax
Act except where appropriate certificates/Forms ie. Form 15H/15G is submitted at
least one month before the due date of interest. |
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Q. Is there a ceiling on the number of FDs I can make or the number of companies
where I can have the FD accounts?
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NO, there is no limit as to the number of FDs. You can be a customer of as many
companies as you like. |
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Q. What if I lose my FD receipt? |
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You should immediately inform the company so that the company can issue you a duplicate
receipt after getting an indemnity bond from you. |
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Q. Can the FD be made in the minor's name?
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Yes, the guardian of the minor can sign on his/ her behalf on the form. |
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Q. Is nomination facility available in company FDs?
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Yes, one can ask for the nomination form and nominate any person to be the beneficiary
in case one expire before the deposit maturity date. |
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Q. What if the day of any payment of interest or maturity amount is Sunday/Bank
Holiday?
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The payment in that case will be made on the next day. |
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Q. Can I withdraw my deposit prematurely?
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Yes, company may consider making premature payment of the deposit subject to the
conditions laid down by the company, on a request made by depositor. |
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Q. Are public deposits of Housing Finance Companies guaranteed by NHB?
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No. The depositor is advised to satisfy himself about the financial position and
all relevant aspects before placing his deposit with the HFC. A person making public
deposits with HFCs should satisfy himself that it holds a valid certificate of registration
for accepting public deposits from NHB. NHB while issuing certificate of registration
to an HFC specifically mentions whether or not it can accept public deposits.
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Q. Do Senior citizens get any extra benefit on the FDs?
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Yes, they do get extra benefits in the form of higher interest rates. |
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Q. Can I obtain a loan from the company on the security of my FD?
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Yes, Housing Finance Companies and Non-banking Finance Companies offer loan facility
upto75% of the principal amount. |