RBI is acting as a constant support in strengthening the very foundation of the banking sector, with stability and security for investors as the core of its objectives. Several reverberating changes have awakened the banking system to newer realities, with the recent scenario of amendments to current FD rules being the most recent.
For age-old and cherished constituents of investments in India, Fixed Deposits mean a great deal for those individuals whose outlook for investment is low risk with guaranteed returns.
Fixed Deposit: A Reliable and Secure Investment Choice
A Fixed Deposit is a concept wherein you deposit a lump sum amount with a bank or financial institution for a given period. After this period, the FD matures, and the entire principal amount is returned, along with a fixed interest rate. Unlike other investment options, where the returns depend on market conditions, FDs are an excellent investment choice for risk-averse investors because they assure predictable and stable returns.
How Many FD Accounts Can You Open?
Commonly asked is, “How many FD accounts can one person open?” As per RBI guidelines, there are no restrictions on the number of FD accounts that an individual can hold. That said, any persons aged 18 years and above are free to open multiple FD accounts in the government or private banks, depending on their financial goals and sources of income.
Opening an FD account is subject to some documentation and the laying down process of an account by the banks. The banks must follow KYC or Know Your Customer, which is identification in the form of identity proof, address proof, and PAN Card.
Why is the PAN Card Mandatory for FDs?
A PAN card is a key document used for opening an FD account with either the bank or the post office. It is mainly for tax purposes.
As per current rules, once the interest earned is more than ₹40,000 (₹50,000 for senior citizens) during the financial year, banks shall deduct TDS at the prescribed rate. Thus, banks would require your PAN card for the tax calculation and deduction.
How to Select the Right Investment Tenure for Your FD
One of the significant advantages of FDs is the flexibility offered in choosing an investment time frame relative to your financial goals. Most banks offer FD tenures from a minimum period of 7 days to a long maximum of 10 years; some interest rates will apply for each time frame. Higher interest rates are generally offered for longer tenures and can be attractive for long-term investors.
The interest rates that banks are offering on FDs now range from 7%-8.5% depending on the tenure, the bank policy and norms. Also, senior citizens enjoy extra interest anywhere from 0.25% to 0.50%, thereby making FDs attractive for retired individuals.