The Reserve Bank of India has made mandatory—under the DICGC—insurance of Rs.1 lakh on Fixed Deposits at all commercial and cooperative banks. This move has made Fixed Deposit (FD) one of the most secured and convenient choices in the market.

With reasonable interest rates, fixed tenures, and easy online access, investing in an FD helps you diversify your investment portfolio with ease.

Let’s take a look at how you can choose the plan that’s just right for you.

Credit Rating

The updated Companies Act, issued in 2013, has made it compulsory for companies to get themselves rated under authorised crediting institutions like CRISIL and CARE. Depending on the fixed deposit you choose—whether company fixed deposit, tax saver fixed deposits, recurring deposit or regular Fixed Deposit—the rating varies.

The rating is based on timely servicing of financial obligations, the interest rates offered, and internal evaluation of the company.

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Ensure that the fixed deposit scheme you go for has an AA rating or higher.


Be wary of the lock-in period of your Fixed Deposit plan. Institutions like Bajaj Finserv offer a tenure of 12-60 months, apart from features like online account access and flexible tenor options. If you want to withdraw before the date of maturity, you might either have to face a penalty or have your interest rates reduced.

Investing in an FD only makes sense if you have managed decent savings apart from the money invested the FD. If you’re in dire need of cash, you can use your FD as collateral to get a loan. You can claim upto 90% of the FD value as your loan amount.

Interest Payments

Depending on how frequent you want the interest payments to be, you choose between monthly, quarterly, semi-yearly, or annual payouts. You can also opt for a payout at the time of maturity. If you want a regular income, you should opt for monthly payments.

Remember, the benefits you receive from fixed deposits with cumulative interest rates are larger. You can compound them into your deposit account to increase the benefits from your FD. Look out for additional interest rate benefits that certain organisations offer. For instance, Bajaj Finserv’s Fixed Deposit scheme gives senior citizens an additional interest of 0.25% on a deposit size of upto Rs.1 crore.

Withdrawal Terms

This is one of the most important but ignored parts of choosing a Fixed Deposit scheme. Factors like penalties, reduced interest rates, and reinvestment alternatives when we withdraw money, all need to be carefully considered.

On auto-termination, the FD Interest Rate might get lowered to adjust for current market changes. Go in for a renewal of your FD account if you want to continue with the same tenure and interest rates.

The type of Fixed Deposit scheme you go with will influence the returns you get during your investment tenure. Don’t forget to read up on all Fixed Deposit investment-related documents before you sign up for one.

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