A FD or fixed deposit is one of the types of financial instruments that are provided and given by the banks in India. This option gives the depositor a much higher interest rate than those on the typical savings accounts until the date of maturity. The money that is put into these accounts is stuck until the maturity date and there are varying interest rates that are offered.
These are just some of the commonly asked questions regarding a fixed deposit account.
Who can open a fixed deposit?
There are many people who can open one of these accounts, including anyone who is a resident Indian or PIO/NRI or even a company or non-individual resident legal entity like trusts and firms.
What documents are required?
When you want to deposit money into a fixed deposit, then there are some documents that you would need to give. These include the following:
- KYC documents like residency proof, age proof and identity proof
- PAN card copy
- Demand draft or cheque for amount being deposited
- Form 15H/15G for any tax deduction at a lower or nil rate
What is the minimum that can be deposited?
Every bank has a different minimum amount that must be deposited, but the most common amount is Rs 10,000.
How long can I keep the account open for?
When it comes to a fixed deposit account a resident Indian would be able to keep the account active for a maximum of 5 years with a minimum time limit of 1 year. An NRI or non-resident Indian can open the account for a minimum of 1 year with a maximum time span of 3 years.
How often is the interest paid out on the fixed deposit?
The frequency that the interest is paid out to the fixed deposit account depends on the type that you choose when it is first open. The interest can be paid out monthly, quarterly or annually depending on the option that you initially chose.
How often is a TDS certificate issued for the fixed deposit account?
A form 16A for TDS is required to be given every quarter within 15 days from the date the tax was paid.
What is a nomination on a fixed deposit?
If you open a fixed deposit account, then you will be asked for a nomination. This is simply the person who is nominated to get the money in the case of the depositor’s death.
What are the documents required if a senior citizen is opening an FD?
If you are attempting to open a senior citizen fixed deposit account, which often pays out a higher interest level, then you would need different documents than for a regular one. Some of the options that are used to prove the age include:
- Birth certificate
- Life insurance policy
- Certificate of leaving school
- Government identification card
- Order for pension payment
- Drivers license
Can a senior citizen open a fixed deposit with someone who isn’t a senior citizen?
Yes, someone who is considered a senior citizen can open one with someone who isn’t considered to be a senior citizen. However, the senior citizen must be the primary account holder.