IDFC Bank Fixed Deposit rates-2024
Introduction:
IDFC First Bank is an emerging financial institution based in Mumbai, India. It obtained its Universal Banking License from the RBI in 2015 and is renowned for its corporate and commercial banking services.
One of the bank's most popular financial products is its fixed deposit scheme. Typically, it is the competitive IDFC Bank FD rates and customer-centric features that make this deposit scheme favorable to investors. Below, we delve into the current interest rates and other significant aspects of this savings option.
Key Features and Advantages of IDFC Bank Fixed Deposits
Characteristics and Advantages of IDFC First FD:
The minimum amount required to open an FD with IDFC First Bank is Rs. 10,000, with no upper limit.
The tenure spans from 7 days to 10 years.
IDFC First Bank deposits are protected under the Deposit Insurance Scheme of RBI, ensuring that up to ₹ 5 lakh of all depositors' funds are insured by DICGC.
IDFC First Bank offers the option to obtain a loan against FD, enabling depositors to fulfill sudden financial needs without prematurely closing the FD.
An auto-Renewal Facility is provided.
Nomination Facility is available.
Tenure
Interest
Rates (PA)
Interest Rate
for Seniors (PA)
1 month 16 days - 5 months 27 days
4.5%
5%
5 months 28 days - 11 months 30 days
5.75%
5%
1 year - 1 year
6.5%
7%
1 year 1 day - 1 year 4 months 12 days
7.5%
8%
8%
8.5%
1 year 4 months 14 days - 1 year 6 months
7.5%
8%
2 years 1 day - 3 years
7.75%
8.25%
2 years 1 day - 3 years
7.25%
7.75%
3 years 1 day - 9 years 11 months 29 days
7%
7.5%
Types of IDFC Bank of India FD Schemes
Regular Fixed Deposit (Reinvestment of Interest Component)
This plan enables the reinvestment of the interest component into the deposit amount.
Minimum deposit amount: Rs 10,000.
Interest is computed on a "simple interest" basis for up to 180 days.
For tenures exceeding 180 days, interest is payable and compounded quarterly.
This plan allows depositors to reinvest the interest earned on their deposit to achieve higher yields.
For the monthly interest payout option, the interest is calculated quarterly and disbursed monthly at a discounted rate compared to the standard fixed deposit rate.
Senior citizen FD depositors receive an additional interest rate of 50bps.
Flexi Fixed Deposits
Flexi Fixed Deposit offers a sweep-out facility to senior citizens, minors, and non-individuals.
Customers can link their FD account to their savings or current account.
Depositors can set a limit for their savings or current account. Any balance exceeding this limit is automatically transferred to their FD account.
NRE Fixed Deposit
Tenure: 1 year – 10 years.
Interest on deposits is compounded every 90 days and paid at maturity.
Depositors can choose a monthly or quarterly payout option.
Funds from NRE deposits are freely repatriable.
NRO Fixed Deposit
Tenure: 7 days – 10 years.
Interest is compounded every 90 days and paid at maturity.
Monthly or quarterly payout options are available.
Deposits can be repatriated up to USD 1 million in one financial year, after applicable tax payments.
FCNR Fixed Deposit
Tenure: 1 year – 5 years.
This FD scheme supports various currencies: US Dollar (USD), Pound Sterling (GBP), Euro (EUR), Australian Dollar (AUD), and Singapore Dollar (SGD).
Interest on deposits is compounded every 180 days, and then for the remaining actual number of days.
Both principal and interest amounts are freely and entirely transferable.
How to Open a Fixed Deposit Account with IDFC Bank
Opening an IDFC First Bank FD account is possible through various channels, including Mobile App, Internet Banking, and offline methods.
Internet Banking:
To open an IDFC First FD account via internet banking, follow these steps:
Log in to your IDFC Bank NetBanking account.
Select the ‘Fixed Deposit’ option from the Main Menu and choose the type of deposit account.
Enter all the required information, nominee details, and maturity instructions.
Complete the account opening process by clicking 'Submit'.
Mobile App - IDFC Bank App:
To open an FD account via the IDFC First Bank App, follow these steps:
Download the IDFC Bank App and sign in.
Choose the ‘Fixed Deposit’ option from the Main Menu and select the type of deposit account.
Fill out the required information, nominee details, and maturity instructions.
Complete the account opening process by clicking 'Submit'.
Offline Opening of IDFC Bank FD:
For offline opening of an IDFC Bank FD account, visit the nearest IDFC Bank branch. Fill out the IDFC Bank FD application form and submit all the necessary documents along with the deposit amount. Upon successful processing of the application, you will receive an FD receipt from IDFC Bank.
Qualifications for Opening a Fixed Deposit Account at IDFC Bank
Individuals or entities meeting the criteria below are eligible to open a fixed deposit with IDFC First bank:
Individuals
Hindu Undivided Family (HUF)
Sole proprietorship and joint ventures
Private/public limited companies (including the one-person company)
Trusts, societies, and associations
Partnership firms, including Limited Liability Partnership (LLP)
Government and quasi-government institutions, municipal corporations, defense establishments
Necessary Documents to Open a Fixed Deposit Account at IDFC Bank
To open an FD with IDFC Bank, the following documents are required:
Proof of identity (PAN Card, Voter ID, Driver's License, Passport, Aadhar Card)
Address proof (Passport, Aadhar Card, Bank statement with a cheque)
Proof of date of birth (Birth Certificate, PAN Card, Discharge Certificate, Aadhar Card)
Early Withdrawal of IDFC Bank Fixed Deposit
IDFC Bank allows premature withdrawal of Fixed Deposits, except for the tax-saving variant. There is a penalty for early withdrawal, and its rate is determined by the 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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