The fixed deposit scheme is a traditional investment that is very popular in the country. It is the most looked-for investment as it guarantees returns in the form of interest. FDs are low-risk investments that offer higher returns than savings accounts. The period of the FD will range from 7 to 10 days, and the rate of interest also ranges with the tenure and the bank.
You can open a fixed deposit account with any bank, and you can also opt for more than one FD. Banks let an individual invest in fixed deposits - both online and offline. Once you open an FD, the bank will give you an acknowledgment of the investment to the investor. It is called Fixed Deposit Receipt.
The FD receipt is the document that acts as the proof of investment for a fixed deposit. The half-page document is given to you from the bank after you open a fixed deposit account. This recipe has crucial details, such as name, age, address, details, and more for the scheme.
FDs are also known as term deposits and work on several factors that need to be checked to understand the terms when an FD would perform; those factors are mentioned below:
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1) Rate of Interest on the FD: |
These are the main features to look for in an FD receipt, and it's always a good idea to double-check the facts, such as the relevant rate of interest and the scheme's maturity term, especially when renewing an existing fixed deposit. It's because interest rates are liable to alter at any time without warning, and it's likely that the previous interest rate was different from the one offered at the time of renewal. |
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2) Scheme Maturity and Auto-Renewals: |
The scheme's maturity date is always stated on the deposit receipt in order to achieve particular objectives - such as financial aid for higher education. It is critical to check the maturity date so that the funds can be accessed at the appropriate time. Otherwise, one may be forced to withdraw prematurely and lose interest. Furthermore, if the depositor has chosen the auto-renewal option, they must check the auto-renewal time on the Fixed Deposit Receipt date. |
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3) Charges on the FD: |
If a deposit is removed by the depositor before the FD's maturity date or a defined time period, certain banks incur a penalty. If there is any kind of punishment, it should be stated on the receipt. The fees for early withdrawal may vary from one bank or company to the next, and they must constantly be reconciled to avoid any future confusion. |
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4) The Nomination Facility: |
A nominee is a person who will get the FD amount (principal plus interest earned) if the depositor passes away. As a result, it's critical to double-check this detail to guarantee the correct name is mentioned. |
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5) Type of Deposit: |
There are two types of deposits: cumulative and non-cumulative. The FDR will include information regarding the deposit type that the applicant has chosen. |
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6) Maturity Amount: |
The interest amount that the investor will receive, as well as the eventual maturity amount that the bank will pay the applicant, will be included in the fixed deposit receipt format. |
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7) Account Holder Details |
When you open a fixed deposit account, you'll be given a customer ID and a bank account number. The bank will include these details, as well as the customer's bank information, on the fixed deposit receipt. |
FDRs could be asked by the bank in different cases, and they are mentioned below:
During a premature withdrawal: In this case, the depositor needs to withdraw the funds before the maturity date, and they would be needed to produce FDR as the ownership proof.
During the time of renewal: In the case of the offline FD, the depositor would be asked to surrender the FDR so the existing FD could be renewed for a new period and a new receipt to be issued.
To avail of a loan against the FD: In order to address a cash shortage, depositors could apply for a loan against the fixed deposit at a lower interest rate than the unsecured loan. In order to do this, they are needed to deposit the FDR as alien to the bank of the term of the loan. Once the loan amount has completely been paid back - the FDR is given back to the returned to the depositor with an updated set of details.