What is a fixed deposit?
Fixed deposits are the most popular form of investment in India. But what is a fixed deposit?
A fixed deposit is a type of financial instrument that offers a certain rate of return (interest) on money (principal) deposited. The interest earned on these deposits remains fixed for the entire term and is paid along with the principal amount at maturity. You can withdraw your funds only after the maturity date, which can be anywhere from 5 to 10 years.
FDs are low risk investments and offer guaranteed returns. The FD rates vary depending on the bank (and sometimes even the branch). Still, it is typically higher than what you would earn on a savings or current account. You can get these fixed deposits from banks, insurance companies, mutual funds, or any other financial institution offering them.
Now that you understand what a fixed deposit is, here’s what you need to know about fixed deposit receipts.
What are fixed deposits receipts?
Once you are done with the formalities of opening a fixed deposit, your financial institution will hand over a paper record called Fixed Deposit Receipt(FDR). This document acts as proof of investment and contains information like name, address, proof of identity, etc.
FDRs also record critical information and the terms of your loan, such as the interest rate, maturity period, withdrawal penalty, name of nominee, and more.
It may interest you that in the days without secure internet, FD receipts were the only proof of investment and had to be preserved carefully. But, now, with the advent of tech and the internet, you can not only open your FD online but also generate your receipt for the same in just a few clicks!
What are the important components of a fixed deposit receipt?
After successfully opening an FD, you will be provided with an FDR. Here are the components of an FDR –
- Name, age, and address
- Nominee name and nomination details
- Bank account details
- Deposit value
- Deposit type
- Value date
- Interest amount
- Maturity period
- Penalty for premature withdrawals
Things to check on your FD receipt
When you receive your fixed deposit receipt, it is important that you verify all the information present on it. This could be from your name to the applicable interest rate and the maturity date. Scanning your documents will help you stay atop your investment and will also help address any discrepancies.
So, here are the things that you should check on your fixed deposit receipt –
- Interest rate
Technically, the interest offered by FDs serves as earnings for you. And, thus FD rates should be the first detail you should reconfirm on your fixed deposit receipt. This is also important because interest rates are not constant and fluctuate based on many factors. They may be changed before prior notice and could have differences from the previously stated rates. Once you open an FD, the interest rate remains the same till maturity.
2. Deposit amount and term
Deposit amount and tenure are another basic set of details that you must confirm on your fixed deposit receipt. A simple error here can lead to mismatched returns.
3. Maturity period and date
A very important detail to be verified on an FD receipt is the maturity date. This is when your FD account will return its principal amount, along with interest (if the FD had no pre-withdrawals). It is very important that you carefully assess your maturity date so that you can withdraw the amount on the correct date.
4. Auto-renewal dates
Many banks offer auto-renewal on FDs. The details of auto-renewal are mentioned on a fixed deposit receipt. So, in case you opt for auto-renewal, you must be fully aware of its details and procedures. If any discrepancies are found early on, they can be corrected by the institution offering the FD.
5. Penalty and other charges
You may be charged a penalty for early withdrawals. The same shall be mentioned on your fixed deposit receipt. You must ensure that all details are correct and in accordance with your agreement.
6. Nomination
Your nominee is the individual who would receive the FD amount in case of your demise. It is paramount that the details of this person are correct and verified.
In conclusion
FD receipts mention all the terms of your investment. Ensure that you fully vet every detail mentioned on your fixed deposit receipt for secured investing.
Frequently Asked Questions
1 How to get a fixed deposit receipt?
If you have opened an FD in an offline mode, you will need to visit the bank or the institute to get your fixed deposit receipt. If you opt for the online mode, you can generate your FDR online, provided your FD has successfully been opened and all formalities have been completed.
2 What happens if I lose my fixed deposit receipt?
In case you lose your FDR, you will need to visit the bank and apply for a duplicate FDR. The issuer bank may also require you to submit an indemnity bond, post which a new FDR will be generated
3 What should I do in case of a fake fixed deposit receipt?
It is possible that you become a target of fraud or phishing scams. In such cases, visit the nearest bank or contact customer service. It is your responsibility to update the bank on fake receipts or similar issues.
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