Fixed Deposits also known as term deposits are standard saving plans in India wherein the consumer receives a definite rate of return for a definite term. Some of the common questions that investors ask include, how many FD accounts one can open and the laws governing it?
Number of FD Accounts
In other words, the Reserve Bank of India, (RBI) does not restrict the amount of FD accounts one can open. Clients do not have limitations on the number of FD accounts opened with different banks or with the same bank chosen, depending on their investment objectives. All of the accounts need the Know Your Customer (KYC) procedure, which involves sending copies of identification and, in some cases, address documents.
Nomination Requirements
Every time one opens an FD account, it is mandatory to name a nominee as well. According to RBI rules multiple nominations are allowed to be made in respect of an account. Where there are many nominees, the account holder is required to make the necessary breakdown on the shares of the money.
PAN Card Necessity
To open a Fixed Deposit account a Permanent Account Number (PAN) card is necessary. For interest earned Rs.40000 per annum (Rs.50000 for senior citizens), TDS is deducted. PAN details are necessary in the bank for the right tax exemptions and tax compliance.
Deposit Insurance
The Deposit Insurance and Credit Guarantee Corporation insures deposits to the tune of ₹5 lakh per depositor per bank.” This coverage is all of the accounts anyone has in the same capacity with that one bank. In order to increase insurance coverage investors can diversify their investment in FDs with one or many banks.
Interest Rates and Tenure
FDs Interest rates vary with the deposit limit and the term period available for the particular financial instrument. There could be instances where the banks involve different rates as and when deposits cross some specific limits. As it is with most investment products, interest is compounded on a quarterly basis, though there are possibilities of making monthly interest payments at slightly lower rates.