A fixed deposit is an investment instrument offered by financial institutions and non-banking financial corporations wherein you can preserve your funds saved for a specified pre-determined period.
Apart from getting the advantage of a competitive interest rate on FD, you also get the scope of choosing your FD term as per your investment goal. There are various reasons that make people inspired to opt for a fixed deposit in New Year. To know more about this, keep reading.
Reasons for Investing in FDs in New Year
Mentioned below are the reasons that encourage you to invest in an FD in the new year:
- Low-Risk Investment
Fixed deposit is considered one of the safest and most convenient investment options available in the market since it is not affected by any market fluctuation. In this way, your risk will get diversified, enabling you to form a more effective investment portfolio.
- Guaranteed Returns
Being one of the safest investment approaches, FD safeguards your invested money alongside the returns. Also, the interest rate on FD is pre-set when you opt for one. It means that you will get the interest rate on investment regardless of the changes in those rates over your investment tenure. The interest rate on FD varies among banks. For example, HDFC Bank FD interest rates will be different from SBI interest rates, and so on.
- Secured Credit Card
Having a fixed deposit enables you to get a secured credit card. If you do not have any credit score or have a poor credit history, you can still get secured credit against your FD by keeping your deposit with your financial institution as collateral.
Eligibility Criteria for Opening a Fixed Deposit
While opening a fixed deposit account, first you need to fulfill certain eligibility criteria. In general, financial institutions consider these individuals and organisations to open a fixed deposit account:
- Resident Indian individuals
- Non-Resident Indian individuals (NRIs)
- Sole proprietorship firms
- Partnership firms
- Limited companies
- Associations, trusts and societies
- Hindu Undivided Families (HUF)
Along with the eligibility criteria to apply for a fixed deposit, take a look at the important documents which you should keep handy before applying.
Documents Required for Opening an FD
Mentioned below are the important documents required at the time of opening an FD. However, this list of documents may vary from person to person and entity to entity.
Documents Required for a Private or Public Limited Company to Open an FD
If you are associated with either a private or public limited company, you will need to submit the documents stated below:
- Registration Certificate
- Certificate of Incorporation
- Company PAN
- Articles of Association
- Memorandum of Association
- Resolution from the Board of Directors
- Bank Statement
- Specimen signatures of authorised persons
- Current telephone or electricity bill
Documents Required for a Partnership Entity to Invest in an FD
If you belong to a Partnership organisation, remember the following documents which you will require to open an FD:
- Partnership Deed
- Permanent Account Number (PAN) Card
- Certificate of Registration
- List of the authorised signatories
- Identity Proof of authorised signatories
- Address Proof of authorised signatories
Documents Required for a Hindu Undivided Family (HUF) to Invest in FD
If you belong to a Hindu Undivided Family (HUF), you need these documents in order to open your fixed deposit:
- Deed and Declaration of the HUF
- PAN card
- Bank account statement of the HUF
- Identity and address proof of the Karta of HUF
Documents Required for a Statutory Body/Local Authority to Invest in FD
If you are associated with a local authority or statutory body, you can open an FD by the submission of these documents:
- PAN Card
- Registration Certificate
- Bank account statement
- Certificate of Incorporation
- Current telephone or electricity bill
- KYC of authorised signatories
- Photocopy of permission letter from government authority
Documents Required for Registered Societies to Invest in an FD
If you belong to a registered society, you may invest in a fixed deposit by submitting these documents as mentioned below:
- PAN Card
- Current telephone or electricity bill
- Bank account statement
- Articles of Association
- Memorandum of Association
- Certificate of Registration
- Identity and Address proof of authorised signatories
- Photocopy of resolution from Board of Directors
- Signatures of authorised persons
After meeting the eligibility criteria and arranging the documents required to open an FD, take a look at the steps to open an FD.
Steps to Open a Fixed Deposit
The application procedure for opening a fixed deposit with a financial institution is discussed below in these steps:
Step 1: Navigate to the official website of your desired financial institution
Step 2: Go to its internet banking portal
Step 3: Enter your credentials for login
Step 4: Select ‘Open Fixed Deposit’.
Step 5: Enter the details such as fixed deposit amount, tenure, type of FD, and interest pay-out
Step 6: Upload the necessary documents accordingly
Step 7: Click on ‘Submit’ in order to book your FD
Also Read: Where Can I Use The Bajaj Finserv EMI Card?
Now from the above discussions you can see why the fixed deposit is a top-notch investment choice. Apart from providing attractive interest rates on FD, it also gives you the scope of premature withdrawal, in addition to letting you take a loan.
