Canara Bank Fixed Deposit Rates-2024
Introduction:
Canara Bank, established in Mangalore in 1906, is one of India's largest nationalized banks and is headquartered in Bengaluru, Karnataka.
Canara Bank offers a variety of fixed deposit schemes that allow customers to securely allocate a portion of their savings for a fixed duration. At the time of account opening, a customer deposits a fixed amount; further additions or withdrawals are not permitted during the deposit's term. Fixed deposits at Canara Bank typically provide higher returns compared to savings accounts.
Key Features and Advantages of Canara Bank Fixed Deposits
FD Tenure: Canara Bank offers fixed deposit terms ranging from 7 days to 10 years.
Senior Citizen Benefit: An additional interest rate of 0.50% per annum is available for senior citizens over the regular rates.
Minimum Deposit Requirement: The minimum amount required to open an FD account at Canara Bank is Rs. 1000.
Nomination Facility: Available for all fixed deposit accounts.
Loan/Overdraft Options: Up to 90% of the deposit amount can be leveraged for a loan or overdraft.
Interest Payout: Interest is paid only upon the maturity of the deposit.
FD Schemes: Canara Bank offers various schemes like Canara Khazana Deposit and Canara Shikhar Deposit, each with competitive interest rates.
Eligibility: Resident Indians, Hindu Undivided Families (HUFs), private and public limited companies, trusts, and partnership firms are eligible to open fixed deposits.
These features make Canara Bank an attractive option for individuals and entities looking to maximize their savings through fixed deposits.
Canara Bank FD Interest Rates 2024
Tenure
Interest
Rates (PA)
Interest Rate
for Seniors (PA)
1 month 16 days - 2 months 29 days
5.25%
5.25%
3 months - 5 months 26 days
5.5%
5.25%
5 months 27 days - 8 months 25 days
6.15%
6.65%
8 months 26 days - 11 months 30 days
6.25%
6.75%
6.85%
7.35%
1 year 2 months 18 days - 1 year 2 months 18 days
7.25%
7.75%
3 years - 4 years 11 months 30 days
6.85%
7.35%
3 years - 4 years 11 months 30 days
6.8%
7.3%
5 years - 9 years 11 months 29 days
6.7%
7.2%
Types of Canra Bank FD Schemes
Fixed Deposit Scheme:
Joint Accounts: Allowed.
Automatic Renewal: Available.
Maturity Period: Ranges from 7 days to 10 years.
Interest Rates: For general public up to Rs.2 crore: 4.00% p.a. to 6.70% p.a.; For senior citizens: 4.00% p.a. to 7.20% p.a.
Loan Options: Up to 90% of FD value.
Partial Withdrawals: Allowed in multiples of Rs.1,000.
Overdue Deposits: Treated at savings account rates.
Taxation: Interest income is subject to TDS under the Income Tax Act, 1961.
Kamadhenu Deposit (Re-investment Plan):
Minimum Deposit: Rs.1,000.
Duration: 5 months to 10 years.
Interest Rates: Annual effective rates from 4.00% p.a. to 5.50% p.a., compounded quarterly.
Interest Payment: At maturity.
Partial Withdrawals: Allowed in multiples of Rs.1,000.
Additional Benefits for Seniors: Additional 0.50% above standard rates.
Loan Options: Up to 90% of deposit amount.
Canara Tax Saver Scheme:
Tenure: 5 years.
Interest Rate: 5.50% p.a. for general citizens.
Interest Payout: Monthly/Quarterly.
Minimum Investment: Rs.100.
Loan Availability: No loans against Tax Saver FD.
Withdrawals: No premature closure or withdrawals.
Nomination: Available, except for accounts maintained by minors.
Tax Benefits: Up to Rs.1.50 lakh under Section 80C.
Ashraya Deposit Scheme for Senior Citizens:
Eligibility: Exclusively for individuals aged 60 and above.
Loan Options: Up to 90% of the FD amount.
Interest Benefits: 0.50% higher rate on all domestic Fixed Deposits.
Interest Payment: Frequency varies based on the deposit type.
Taxation: Interest income is subject to TDS.
These diverse options cater to different financial needs and preferences, from those seeking tax benefits to senior citizens looking for higher returns on their savings.
How to Open a Fixed Deposit Account with Canara Bank
Canara Bank allows you to open a fixed deposit account through various methods including internet banking, mobile app, and visiting a branch in person.
1) Internet Banking:
Step 1: Log into your Canara Bank NetBanking account.
Step 2: Navigate to the Term Deposit page, click ‘New Account’, and select the type of deposit account.
Step 3: Enter all required details including nominee information, payment, and maturity instructions.
Step 4: Click on ‘Open Deposit’ to verify the details, then ‘Confirm’, and authenticate the transaction. A confirmation pop-up will appear once the account is successfully opened.
2) Mobile App - Canara Bank App:
Step 1: Download and sign into the Canara Bank App.
Step 2: Select ‘New Account’, choose the type of deposit account.
Step 3: Complete the required fields, including payment, nominee information, and maturity instructions.
Step 4: Click on ‘Open Deposit’ to review the details, then ‘Confirm’, and authenticate the transaction. A confirmation message will display, indicating the account opening.
3) Offline at a Branch:
Step 1: Visit your nearest Canara Bank branch.
Step 2: Fill out the FD application form and submit it along with the necessary documents and the deposit amount.
Step 3: Once your application is processed, you will receive an FD receipt from Canara Bank.
These methods provide flexible options for customers to start earning interest on their savings with fixed deposits at Canara Bank.
Qualifications for Opening a Fixed Deposit Account at Canara Bank
To invest in a Canara Bank fixed deposit, the following groups are eligible:
Resident individuals and Non-Resident Indians (NRIs).
Minors, with the requirement that a guardian operates the account on their behalf.
Members of Hindu Undivided Families (HUF).
Companies, organizations, and other institutions are also eligible to open fixed deposit accounts.
Necessary Documents to Open a Fixed Deposit Account at Canara Bank
To open a fixed deposit account at Canara Bank, you will need to provide the following documents:
Proof of Address (any one):
Bank statement with a cheque
Electricity bill
Telephone bill
Passport
ID or certificate issued by the Post Office
Proof of Identity (any one):
Driving license
PAN card
Voter ID
Passport
Photo ration card
These documents are required to verify your identity and residence when setting up a fixed deposit account at Canara Bank.
Early Withdrawal of Canara Bank Fixed Deposit
All fixed deposits at Canara Bank can be prematurely withdrawn, with the exception of tax-saving fixed deposits. Canara Bank imposes a penalty of 1% for early withdrawal. Please note that this penalty rate may be subject to change based on Canara Bank's terms and conditions.
Role of Fixed Deposits in an Investment Portfolio
Investing in market-linked instruments carries risks, particularly when aiming for higher returns.
To achieve a balanced financial portfolio, it's crucial for investors to include safer investment options as well.
Fixed deposits offer a secure investment avenue with guaranteed returns, contrasting with higher-risk options.
Thus, even if investors incur losses from other ventures, they can offset some of those losses through the stable earnings from fixed deposits.
This strategy can help maintain financial stability in their overall investment portfolio.
Benefits of Investing in a Fixed Deposit Account
IFixed deposit accounts offer several advantages that make them appealing to investors:
Stable Returns: These accounts provide a constant interest rate, ensuring predictable and steady returns.
Low Risk: As FDs are not impacted by market volatility, they are considered low-risk, making them suitable for conservative investors.
Capital Preservation: The principal amount is secure, and investors are assured of receiving their initial investment plus the accrued interest at the end of the maturity period.
Flexible Tenure Options: Investors can select from various tenure lengths offered by banks, ranging from a few months to several years, to align with their financial objectives.
Ease of Investment: Setting up a fixed deposit account is easy, requiring only minimal paperwork and a straightforward application process.
Regular Income Stream: Particularly beneficial for retirees, FDs can provide a consistent income stream through periodic interest payouts (monthly, quarterly, or annually).
Loan Facilities: Fixed deposits can also serve as collateral for loans, offering financial flexibility while keeping the deposit intact.
Tax Benefits: Certain types of fixed deposits qualify for tax deductions under specific sections of the Income Tax Act, promoting long-term savings.
No Market Dependency: The performance of FDs is independent of market conditions, offering stability regardless of economic fluctuations.
Ideal for Short to Medium-Term Goals: FDs are well-suited for meeting short to medium-term financial objectives, such as purchasing a vehicle, funding education, or planning a holiday.
Drawbacks of Fixed Deposit Accounts
Fixed deposit accounts come with certain limitations, which are outlined below:
Taxation on Interest: The interest income from fixed deposits is taxable under "Income From Other Sources" when you file your Income Tax Returns (ITR). For those seeking tax-free earnings, options like Tax-Saver FDs, ULIPs, PPF, and government bonds may be more suitable.
TDS Applicability: TDS (Tax Deducted at Source) is deducted from the interest earned on fixed deposits, which can reduce the overall returns from your investment.
Comparatively Lower Interest Rates: Generally, fixed deposits offer lower interest rates, typically between 5% to 9% per annum, which may be less than other investment avenues, potentially limiting your investment growth.
Interest Rates and Inflation: Sometimes, the interest rates on fixed deposits may not keep up with inflation, leading to a decrease in the real value of your returns over time.
Fixed Interest Rates: Unlike other investments where rates might fluctuate, fixed deposits maintain a constant rate throughout their tenure. This means returns do not increase even if market or economic conditions improve.
Limited Access to Funds: Your funds are locked in for the duration of the deposit, restricting access to your money. Early withdrawal is possible but usually incurs penalties, affecting your total returns.
Understanding Loan Against Fixed Deposit
Investors with fixed deposits can secure a loan against their FD holdings. The maximum loan amount available can differ from one bank to another and is typically a specified percentage of the fixed deposit value.
The interest rates for loans against fixed deposits are generally lower than those for unsecured loans. Investors looking to take advantage of this should carefully compare interest rates.
The repayment period for such a loan is usually capped at the maturity term of the associated fixed deposit.
Tax Implications on Fixed Deposit Earnings
Interest earned from fixed deposits is subject to Tax Deducted at Source (TDS) according to the rules set forth in the Income Tax Act. This interest income is then reported on Income Tax Returns under "Income from Other Sources."
The Income Tax Department applies the TDS against the individual's total tax liability. However, TDS on interest income is only deducted when the total interest earnings across all sources exceed Rs. 40,000 annually.
If earnings are below this threshold, individuals should submit Form 15G/H to the financial institution to avoid TDS. Form 15G/H can also be submitted for interest earnings above Rs. 40,000, but in such cases, individuals must ensure they meet any remaining tax obligations themselves.
Additionally, if an individual invests in a tax-saving FD, they are eligible to claim a tax exemption on the principal amount up to Rs. 1.5 lakh per financial year.
What is a fixed deposit?
A fixed deposit is a type of savings account where money is deposited for a fixed period and earns interest at a predetermined rate.
How safe are fixed deposits?
Fixed deposits are considered very safe as they are not affected by market fluctuations and often guaranteed by the bank or financial institution.
Can I withdraw money from my fixed deposit before maturity?
Yes, but early withdrawal may incur penalties and result in lower interest earnings.
Do fixed deposits offer tax benefits?
Tax-saver fixed deposits qualify for tax deductions under Section 80C of the Income Tax Act but come with a lock-in period.
What documents are required to open a fixed deposit account?
Typically, you need identity proof, address proof, and sometimes a PAN card, along with the completed application form.
Author
Harish Malhi
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