Introduction

SBI provides a diverse range of fixed deposits with varying interest rates for different tenures. Minimum tenure for SBI Bank fixed deposits is seven days. The maximum tenure is ten years. The minimum deposit is INR 1,000. There is no cap on maximum investment. The bank levies 0.5%-1% as a penalty for premature withdrawal. There is also a loan facility against the FD. Investors can get up to 90% of the deposit amount as a loan.

SBI FD Interest Rates 2020

SBI FD interest rates are given below.

Note: SBI revises FD interest rates periodically 

SBI Bank fixed deposits have a minimum interest rate of 2.9% and a maximum of 5.4%. All fixed deposit schemes for senior citizens in SBI have a higher interest rate than regular citizens. The interest for SBI fixed deposit scheme is calculated every quarter. However, the investors can choose the interest payment intervals. It can be regular interest payments or at the time of maturity.

Any investment made in Tax Savings FD of SBI qualifies for tax saving under section 80C of the Income Tax Act. However, any investment made in other SBI FDs does not qualify for tax savings.

TDS of 10% is deducted on interest paid or payable by the banks or financial institutions. From the AY 20-21, the limit for TDS has been increased from INR 10000 to INR 40000 interest income. Hence, the TDS is applicable on interest income above INR 40,000 per annum (INR 50,000 for senior citizens) from AY 20-21. 

Furthermore, in the case where the investor doesn’t provide PAN details, the TDS would be 20%. Also, the interest income is taxable at the applicable income tax slabs. No surcharge, education cess or SHEC is added to the above rates. The TDS is deducted at the basic rate.

Key Features of SBI Fixed Deposit

Following are the key features of SBI Fixed Deposits:

• SBI fixed deposit scheme offers guaranteed income at a fixed interest rate.
• Tenure: The tenure ranges between 7 days to 10 years
• Minimum Deposit Amount: The minimum amount to open an FD with SBI Bank is INR 1,000.
• Maximum Amount: No upper limit on the deposit amount.
• SBI bank allows depositors to deposit bulk amounts, i.e. deposit above INR 2 crore.
• Interest Rate: SBI FD offers interest rates in the range of 2.50% p.a to 5.50% p.a.
• Senior Citizens FD Rate: SBI offers a higher interest rate for senior citizens. An extra 0.5% is offered to individuals above 60 years.
• For deposits held beyond five years, SBI offers 0.3% additional interest rate.
• Depositors can choose interest payout frequency (monthly or quarterly)
• Safety: SBI Bank provides insurance cover for deposits up to INR 5,00,000 to all its investors.
• Loan against FD: Depositors can avail loan on the SBI Bank FDs. This is to help the depositors to meet their financial requirements without having to break the FD.
• Nomination Facility: SBI Bank allows depositors to nominate beneficiaries for the deposits.
• Auto-Renewal: The bank provides the auto-renewal facility of the FD account.
• Convenience: Depositors can open FD investment anywhere at any time at their convenience. FD can be opened through Internet Banking or by visiting the nearest bank branch.

Types of Fixed Deposits FD offered by SBI

• Regular FD
• Flexi Deposit Scheme
• Reinvestment Plan
• Annuity Deposit
• MOD
• Tax Savings

Types of Fixed Deposits: In Detail

SBI Regular FD

• Guaranteed Returns: SBI Regular Fixed Deposit Account allows depositors to park lump sum amounts and get guaranteed returns.
• Tenure: The tenure ranges between 7 days to 10 years
• Minimum Deposit Amount: INR 1,000
• Maximum Deposit Amount: No Limit
• Interest Payment: Depositors can choose between monthly or quarterly or calendar quarters based on their requirements. Also, monthly interest payments are at discounted rates.
• Loan: Depositors can avail a loan or overdraft up to 90% of their deposit amount.
• Nomination Facility: Available
• Premature Withdrawals: SBI FD allows premature withdrawals, however with a penalty.
• TDS: SBI deducts TDS at applicable rates in case Form 15G/15H is not submitted.
• Flexibility: SBI FD offers flexibility to depositors to convert from regular interest payout to cumulative interest payout and vice versa.
• Renewals: SBI FD provides auto-renewals in case there isn’t any instruction given while opening the account.

SBI Flexi Deposit Scheme

• SBI Flexi deposit scheme is a variant of recurring deposit. However, this scheme allows variable deposit amounts instead of fixed instalments.
• Minimum Deposit Period: 5 years
• Maximum Deposit Period: 7 years
• Minimum Deposit Amount: INR 5,000 in a financial year. Minimum of INR 500 at one instance. Also, deposits can be made any number of times in a month.
• Maximum Deposit Amount: INR 50,000 in a financial year.
• Penalty for payment default: INR 50 in a financial year.
• Interest: Rate of interest is the same as a regular fixed deposit.
• Interest Payment: Interest for SBI staff and SBI pensioners is 1% higher than the applicable rate. Similarly, the rate for senior citizens is 0.5% higher than the applicable interest rate.
• Loan: Depositors can avail loan to 90% of their deposit amount. 
• Nomination Facility: Available
• Transferable: The account can be transferred from one SBI branch to the other easily.
• Mode of Holding: Single or joint account
• Eligibility: Resident individuals, including minors, can open the SBI Flexi Deposit Scheme.

SBI Reinvestment Plan

SBI Reinvestment Plan one of the fixed deposits FD plan where the interest is added to the principal amount. Here the interest is paid upon maturity. The deposits earn compound interest.

• Minimum Deposit Period: 6 Months
• Maximum Deposit Period: 10 years
• Minimum Deposit Amount: INR 1,000 and in multiples of INR 100 after that.
• Maximum Deposit Amount: No limit
• Interest: Rate of interest is the same as a regular fixed deposit; however, the interest gets compounded quarterly.
• Interest Payment: Interest is paid upon maturity. However, interest for SBI staff and SBI pensioners is 1% higher than the applicable rate. Similarly, for senior citizens, the rate is 0.5% higher than the applicable interest rate.
• Loan: Depositors can avail loan to 90% of their deposit amount. 
• Nomination Facility: Available
• TDS: SBI deducts TDS at applicable rates if Form 15G/15H is not submitted.
• Transferable: The account can be transferred from one SBI branch to the other easily.
• Mode of Holding: Single or joint account
• Eligibility: Resident Indians (single or joint), Minor, Company, Firm, Local Bodies, any government department and HUFs can open SBI Reinvestment Plan.
• Flexibility: SBI FD offers flexibility to depositors to convert from regular interest payout to cumulative interest payout and vice versa.

SBI Annuity Deposit Scheme

• SBI Annuity Deposit Scheme enables depositors to deposit a lump sum amount to receive equated monthly instalments. The EMIs comprise a part of the principal amount as well as interest on the reducing principal amount. The interest is compounded quarterly. However, the amount is discounted to the monthly value.
• Minimum Deposit Duration: 36/60/84 or 120 months.
• Minimum Deposit Amount: INR 1,000 and in multiples of INR 100 after that.
• Maximum Deposit Amount: No limit
• Interest: Rate of interest is the same as a regular fixed deposit; however, the interest gets compounded quarterly. Also, for SBI staff and SBI pensioners interest is 1% higher than the applicable rate. Similarly, for senior citizens, the rate is 0.5% higher than the applicable interest rate.
• Annuity Payment: On the anniversary date of the month following the month of deposit. However, in case the date is non-existent, i.e. 29th or 30th or 31st, the payment would then be on the 1st of next month.
• Premature Withdrawals: Available, however with a penalty.
• Loan/Overdraft: Depositors can avail a loan or overdraft up to 75% of the balance amount.
• Nomination Facility: Available
• Transferable: The account can be transferred from one SBI branch to the other easily.
• Mode of Holding: Single or joint account
• Eligibility: Resident individuals, including minors, can open the SBI Annuity Deposit Scheme.

SBI Multi Option Deposit Scheme

• SBI Multi Option Deposit Scheme (MODS) allows linking fixed deposit account to current account or savings account. Unlike regular fixed deposits, MODS allows depositors to withdraw money in multiples of INR 1,000. The remaining amount will continue to earn interest.
• Minimum Deposit Period: 1 year
• Maximum Deposit Period: 5 years
• Minimum Deposit Amount: INR 10,000 and in multiples of INR 1,000 thereafter.
• Maximum Deposit Amount: No limit
• Interest: Rate of interest is the same as a regular fixed deposit.
• Loan: Depositors can avail loan on their deposit amount. However, future withdrawals are not permitted in case of a loan against the account is taken.
• Nomination Facility: Available
• TDS: SBI deducts TDS at applicable rates.
• Transferable: The account can be transferred from one SBI branch to the other easily.
• Premature Closure: Available, however with a penalty.
• Auto Sweep: Available. However, the auto sweep of INR 10,000 takes place only when the minimum balance amount in a savings account or current account is INR 35,000.
• Eligibility: Resident Indians (single or joint), Minor, Company, Firm, Local Bodies, any government department and HUFs can open SBI multi option deposit scheme.

SBI Tax Savings Scheme, 2006

• Minimum Deposit Period: 5 years
• Maximum Deposit Period: 10 years
• Minimum Deposit Amount: INR 1,000 and in multiples of INR 100 thereafter.
• Maximum Deposit Amount: INR 1,50,000 per year
• Interest Payment: The interest payment terms are similar to that of regular fixed deposit. However, interest for SBI staff and SBI pensioners is 1% higher than the applicable rate. Similarly, for senior citizens, the rate is 0.5% higher than the applicable interest rate.
• Loan: No loan facility available during the lock-in period of 5 years.
• Nomination Facility: Available
• Taxation: Deposits up to INR 1,50,000 in a year qualify for Income Tax deduction under Section 80 C of the Income Tax Act. However, SBI deducts TDS at applicable rates. Also, the depositor has to submit Form 15G/H to get an exemption.
• Transferable: The account can be transferred from one SBI branch to the other easily.
• Joint Account: A joint account can be opened by two adults or by an adult and a minor.
• Eligibility: Resident Indians and HUFs have a PAN Card and can open SBI Tax Savings Scheme.

FD account opening process

SBI FD can be opened online and offline. One can invest in SBI Bank FD offline by visiting the nearest branch of SBI. The investors have to submit the FD application form with details like the type of FD, interest payout frequency, and tenure. Along with the application form, one also has to submit all the necessary documents.

Account opening online  is the same as offline, but instead of visiting the branch, one has to go to the SBI’s website.

Following are the documents required to open an FD in SBI are:

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Age Proof (Birth Certificate, Matriculation Certificate)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Bank Account details like account number, IFSC code and branch
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Also, only eligible investors can invest in SBI Bank FD. The eligibility criteria to invest in SBI Bank FD is:

• Resident Individuals
• Partnership Firms
• Public and Private Limited companies
• Societies
• Trusts
• HUFs
• NRIs and PIOs (Non-Resident Indians and Persons of Indian Origin)

Loan against FD account

SBI provides a loan against FD. Investors can get 90% of the deposit amount as a loan. The FD will be used as collateral. And on the occasion of non-repayment of the loan, the bank uses the FD to recover the loan amount. The bank charges a 1% interest rate above the FD interest rate for the loan. The loan repayment period is 3-5 years.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using Scripbox’s online loan EMI calculator. The loan EMI calculator works as a home loan calculator. It also works as a personal loan EMI calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios. They can do so changing the car loan interest rate, personal loan interest rate, and home loan interest rate.

Premature withdrawal

SBI allows premature withdrawal on its FDs. However, it charges a penalty for the same. For deposits up to INR 5 lakh, for all tenures, the penalty is 0.5%. The deposits above INR 5 lakh but below INR 1 Cr have a penalty of 1%. For all deposits withdrawn with seven days of deposit, there is no penalty.

What is the tenure range for SBI Fixed Deposit?

The tenure range for SBI fixed deposit is seven days to 10 years. The tenure breakdown is:

Does SBI Bank offer Recurring Deposits?

Yes, SBI offers recurring deposits for its depositors. The recurring deposits have a minimum tenure of one year. The maximum tenure of the recurring deposit is ten years. Depositors can open an RD account either by going to the bank branch or online using net banking. Below are the SBI RD interest rates for different tenures.

Note: SBI revises RD interest rates periodically

Can I open an FD account without holding a bank account with SBI?

Yes, one can open an FD in SBI without having a saving or current account in SBI. The individual has to submit the following documents for the same.

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Age Proof (Birth Certificate, Matriculation Certificate)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Bank Account details
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Who is eligible for opening an FD account in SBI?

Only eligible investors can invest in SBI FD. The eligibility criteria to invest in SBI FD is:

• Resident Individuals
• Partnership Firms
• Public and Private Limited companies
• Societies
• Trusts
• HUFs
• NRIs and PIOs (Non-Resident Indians and Persons of Indian Origin)

Is PAN mandatory to open an SBI FD account?

A PAN card isn’t mandatory to open an SBI FD account. However, there are a few implications for the same.

• Under section 206AA, TDS will be deducted at the rate of 20% instead of TDS at a rate of  10% u/s 194A
• The bank will not issue any TDS certificate.
• The income tax department will not credit TDS
• Form 15G/H and other exemption certificates will be invalid and penal TDS will apply.

What is the current interest rate on a fixed deposit account in SBI?

The SBI FD interest rates are higher than the rates on savings accounts. The interest calculation for SBI fixed deposit scheme is done every quarter. However, investors can choose the interest payment intervals. It can be regular interest payments or at the time of maturity. Also, the interest income is taxable at the rate of an individual’s income tax slabs.

The current fixed deposit rates of SBI are:

For regular citizens the SBI FD interest rates are:

• For a tenure of 7-45 days, it is 2.9%
• 46-179 days the FD rate is 3.9%
• The FD rate for 180-364 days is 4.4%
• For 1 year to 2 years 364 days, it is 5.1%
• 3 years to 4 years 364 days 5.3%
• Any FD with a tenure of 5-10 years is 5.4%

All fixed deposit schemes for senior citizens in SBI have a higher interest rate than regular citizens. The SBI FD interest rates are:

• For a tenure of 7-45 days, it is 3.4%
• For 46-179 days it is 4.4%
• The FD rate for 180-364 days is 4.9%
• For 1 year to 2 years 364 days, it is 5.6%
• 3 years to 4 years 364 days 5.8%
• Any FD with a tenure of 5-10 years is 6.2%

To calculate the maturity amount of an FD investment, one can use a fixed deposit calculator. Scripbox’s fixed deposit calculator is available online and is free to use.

What are the documents required to open a Fixed Deposit account in SBI Bank?

The documents required to open an FD in SBI are:

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Age Proof (Birth Certificate, Matriculation Certificate)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Bank Account details like account number, IFSC code and branch 
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Can I take a loan against a fixed deposit?

SBI provides a loan against FD. Investors can get 90% of the deposit amount as loan. The FD will be used as collateral. And on the occasion of non-repayment of the loan, the bank uses the FD to recover the loan amount. The bank charges a 1% interest rate above the FD interest rate for the loan. The loan repayment period is 3-5 years.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using the loan EMI calculator. The loan EMI calculator works as a home loan calculator. It also works as a personal loan EMI calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios. They can do so changing the car loan interest rate, personal loan interest rate, and home loan interest rate.

What are the tax implications of fixed deposits?

5-year tax saving FDs and FCNR FDs (NRI FD) are the only two FDs whose investment qualifies for tax exemption. However, all the FDs are subject to TDS of 10%. TDS is charged only if the interest earned is above INR 40,000 and (INR 50,000 for senior citizens).  To know the interest earned is above or below the TDS threshold limit, one can use multiple bank FD calculators available online.

One can use the Income Tax Calculator to calculate their tax liability. Scripbox’s Income Tax Calculator is online and free to use.

Is the penalty changed for early withdrawal?

SBI allows premature withdrawal on its FDs. However, it charges a penalty for the same. For deposits up to INR 5 lakh, for all tenures, the penalty is 0.5%. The deposits above INR 5 lakh but below INR 1 Cr have a penalty of 1%. For all deposits withdrawn with seven days of deposit, there is no penalty.

What is cumulative FD and traditional FD?

Cumulative FD is an FD where interest is compounded monthly and paid at the time of maturity. The interest earns interest in cumulative FD. Traditional FD or non-cumulative FD is the one where interest is paid out monthly, quarterly, half-yearly, or annually as per the investor’s choice.

Frequently Asked Questions

Introduction

Anything can lead to the market breaking resistance levels (highs) and support levels (lows). Investor sentiments, credit ratings and any rumour about the company are just a few examples that lead to volatility in the market. These market movements can lead to a stock being overvalued or undervalued compared to its intrinsic value (book value). In other words, the stock is either available at a premium or at a discount on the stock exchange. Value investors believe in investing in stocks trading at a discount. They hunt for undervalued stocks and invest in them. In this article, we have covered the basics of value investing.

What is value investing?

Value investing is an investment strategy that involves purchasing stocks or securities that are under-priced. In other words, the strategy helps in identifying securities that are trading below their intrinsic value.  Value investing was first started by Benjamin Graham and David Dodd in 1928.

The intrinsic value of a share is determined by doing fundamental analysis of the company. Value investing strategy capitalizes on the potential profits by purchasing stocks at low prices. However, these companies have good potential, though they are unpopular and undervalued.

Therefore, value investors are constantly searching for securities that in their opinion, the stock market is underestimating. Also, value investors believe that market reactions to good or bad news give them an opportunity to buy stocks at lower prices. However, they firmly believe that company financials are more important while investing to build wealth for the long term.

Value investing is among one of the strategies the stock market genius Warren Buffett swears by. Also, there have been various analyses proving value stocks perform better than growth stocks in the long term.

How do value investing work?

Value investing is quite simple and straightforward. If an investor identifies stocks trading at a lower price than its intrinsic value, they invest in the stock without a doubt. However, analyzing the fundamentals of the company is very important. Upon identifying stocks based on their intrinsic value, value investors start accumulating them and hold for long periods.

Let’s understand value investing with a simple example. During a seasonal sale, the products are offered at a discounted price. Mr Krish wishes to buy a laptop. During a discount sale, he is getting a very good deal for it. It makes sense for him to buy the laptop at a discount as the actual price is higher. He is getting the same features and specifications for a lesser amount during the sale.

Similarly, identifying stocks that are currently undervalued and investing in them may help in earning good returns. However, the investor should make sure the company is fundamentally strong and has good business expansion plans for the future.

Therefore, through value investing, investors identify and invest in stocks that are currently undervalued. Also, holding them for longer durations is the key to earning better returns.

How to calculate intrinsic value?

The intrinsic value of a business is the book value or fundamental value (true value) of a business. It is independent of market perceptions. One can calculate the intrinsic value of a business using its financial statements. There are many methods to value a business. However, the most commonly used one is the Discounted Cash Flow model (DCF).

This model determines the stocks intrinsic value (true value) by estimating the current value of its future free cash flows. It is the actual worth of the underlying stock. In simple terms, if one were to sell the business (including the assets) today, it is the amount it would receive.

Free Cash Flows is the amount of cash flows a firm generates post taxes. The cash flows are calculated after considering the operating cash flows, investing cash flows and financing cash flows. There are two types of free cash flows. Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE). The significant difference between the two cash flows is the consideration of interest expense and debt repayments. FCFF excludes the impact of debt repayments and interest expense. At the same time, FCFE accounts for interest expense and debt repayments. Whether one chooses FCFE or FCFF, the formula for calculating the intrinsic value is the same in both cases.

The formula for the intrinsic value of a business using the Discounted Cash Flow model (DCF) is:

Where,

CFn = Cash flows for the period n

r = discount rate or weighted average cost or capital (WACC).

g = growth rate of future cash flows

The cash flow for each year is calculated and discounted. And since the business has perpetual existence, it is important to determine the future cash flows for an infinite number of years. But doing so can be difficult as one doesn’t know the number of years the business will actually exist. Hence there is the concept of terminal value. Terminal value is all future cash flows of a firm. It is calculated by using the last year’s future cash flows and the growth rate that these cash flows will increase each year.

The value from the above formula is the intrinsic value of the business. And to determine per-share value, one has to divide it by the number of outstanding shares in the market.

If the intrinsic value per share is lower than the current market share price, then the stock is overvalued. However, if the intrinsic value per share is higher than the current market share price, then the stock is undervalued. Value investors will jump right in and start accumulating these undervalued stocks at the current share price. And when the share price starts going up, they earn good returns.

Warren Buffett believes that one has to invest in businesses that they understand. Hence investors have to perform a qualitative analysis as well. In doing so, they will understand the business, their strategies, competitive advantage, and the management style better. Companies having a better competitive advantage will fare well in the long term.

Fundamentals of selecting the stocks

To invest in any stock, there are certain ratios analysts consider. They give a fair idea of the value of the stock. With the help of the company’s financial statements, one can get a rough idea of whether a stock is overvalued or undervalued using these ratios. Below is a beginners guide to valuing stock prices.  Before arriving at a decision, one can use two ratios together instead of using the below ratios as standalone.

Price to Earnings Ratio

Price to earnings ratio or PE ratio compares a business’s earnings per share (EPS) and the current market price. It shows how much an investor is paying for one rupee of the company’s earnings. A higher PE ratio indicates investors are spending more for one rupee of the company’s profit. A lower PE ratio means investors are paying less for one rupee of a company’s profit.

PE ratio is calculated by dividing the current market price with current or historical or expected EPS of the company. EPS is calculated by dividing the bottom line of a business (net profits) by the number of outstanding shares. PE ratio helps in comparing individual stocks within one industry. One cannot compare PE ratios of individual stocks from two different industries.

Price to Book Ratio

Price to book ratio or PB ratio compares the book value per share to the current market price of a company. Book value is the value of the company if all the assets liquidated. Book value per share is calculated by dividing the book value by the number of outstanding shares. PB ratio indicates how much the investors are willing to pay for one rupee of the company’s assets. A lower PB suggests the stock is cheaper and discounted. A high PB indicates otherwise. This financial ratio doesn’t take the company’s intangible assets like brand and goodwill into consideration.

Return on Equity

Return on equity measures the profitability of a company in relation to its equity. It is calculated by using the net profit of the business. The net profit is divided by the shareholder’s equity. Both net profit and shareholder’s equity is available in the company’s financials. It is indicated as a percentage. A high ROE means the company is making high profits. One can use return on equity and PE ratio to determine if the stock is available at a discount. A high and rising return on equity with a low historic PE indicates the company stock is available at a discount.

Debt to Equity Ratio

Debt to equity ratio is a financial ratio that indicates whether a company is over-leveraged or under leveraged. In simple terms, it shows in what proportion that company is using debt and equity to finance its assets. It is calculated by dividing the company’s debt with shareholders equity. A high debt to equity ratio indicates the company is over-leveraged. A low debt to equity suggests the company is using less debt to finance its assets. A low debt to equity ratio is always better. Ideally, 2:1 should be the debt to equity ratio.

Price Earning to Growth Ratio

Price to earnings growth ratio (PEG) takes into consideration the company’s earnings growth while calculating the PE ratio. It helps in identifying cheap stocks which are growing. Investors should always pick stocks with positive earnings per growth ratio. One has to consider the past few years of growth rate while selecting a stock. A company with consistent growth is better.

Advantages of Value Investing

Following are the advantages of value investing:

Good Stocks at lower rates

This is one of the biggest advantages of value investing. The strategy helps in identifying securities that have good potential and are currently trading lower to their intrinsic value. Investing in securities that are presently underpriced on the stock exchange will help in churning higher returns in the future. Also, as these stocks are not popular in the market, value investors can get the stocks for a less price. Investing in value stocks can provide a margin of safety of an investor. The margin of safety is the difference between the intrinsic value of the price and the current market price of the stock.

Proven Strategy

Value investing was first started by Benjamin Graham and David Dodd in 1928. For over a century, the strategy has been in use. Value investing has proven to be a successful investment strategy over time. Also, a value stock has the potential to become multibagger stock.

However, investors need to get the stock-picking right. When done right, value investing has given high profits for investors.

Investing backed by Facts

Analysts select value stocks after doing an in-depth fundamental analysis of the company. The strategy suggests doing a comprehensive study of the company and also its future prospects. Therefore, investing based on solid research and facts is a better strategy than speculating.

Disadvantages of Value Investing

Risk factor

There is a big risk in investing in undervalued stocks. Any miscalculation may result in heavy losses. Therefore, investors have to be mindful and willing to undertake the risk.

Diversification

Investing in value stocks that belong to a particular sector increases portfolio risk. Lack of diversification will result in losses when the sector falls. An intelligent investor always knows that he/she shouldn’t put all their eggs in one basket. To diversify, it is always better to invest across market capitalization such as blue chip stocks, mid cap stocks, and small cap stocks.

Blue chip stocks are also known as large cap stocks. They are established businesses and are the top 100 stocks by market capitalization. Mid cap stocks are stocks that rank between 101 and 250. Small cap stocks are stocks after the rank 250.

Holding period

It can take years for a value stock to maximize its intrinsic value. However, there is no guarantee that it would reach its full potential. Hence, long holding periods and uncertainty make value stocks risky.

Conclusion

Value investing is a long term strategy. One has to have patience and let the stock grow to its actual value. This will help them to build wealth. Also, a value stock has the potential to become multibagger stock. 

The stock market genius, Warren Buffett, also follows the principles of value investing. He believes that one has to sell their investments only when the price of these investments exceeds the intrinsic value or fair market value.

To practice value investing, few things that investors need to keep in mind are:

• The concept of intrinsic value of the business is very important. One has to always know the intrinsic value of the business to access the stock.
• Also, invest in stocks that are undervalued.  This is one of the main principles of value investing.
• Do not follow the herd mentality. Invest in stocks that others are ignoring.
• Value investing is long term. An intelligent investor is always patient enough with their investments.

One has to be very careful while calculating the intrinsic value. Any miscalculation might lead to heavy losses. Hence investors with high-risk tolerance can consider investing in value stocks.

One has to be mindful while doing these calculations. It is always advised to take help of a financial advisor if one cannot perform such complex calculations. A financial advisor will do these calculations and recommend stocks based on their intrinsic value.  Additionally, a financial advisor will also help in making investment decisions while devising a financial plan and help in buying stocks for the portfolio. Also, some of the other services provided by financial advisors are tax planning, portfolio monitoring and revising.  

Alternatively, they can invest in mutual funds (value funds) that practice value investing as their core strategy. One such category of equity mutual funds is value funds. These funds use a value investing approach to invest in stocks.

The other categories of equity mutual funds are large cap fund, mid cap fund and small cap fund. Equity Linked Saving Schemes (ELSS) are also equity mutual funds. One can invest in Equity Linked Saving Schemes (ELSS) for tax planning. As they qualify for income tax exemption under Section 80C of the Income Tax Act.

Mutual funds also offer hybrid funds and debt funds. To know more about them, read a beginners’ guide to mutual funds.

Introduction

Alternative Investment Funds AIF differ from regular conventional investments (asset classes) like stocks, debt securities etc. Alternative Investment Fund is a privately pooled investment vehicle that collects money from sophisticated private investors.

AIFs include private equity, venture capital, hedge fund, and angel fund etc. Also, AIFs don’t come under the purview of Securities and Exchange Board of India SEBI mutual fund regulations. Investors who wish to diversify can choose Alternative Investment Funds to invest. All Indians, including NRIs, PIOs, and OCIs, are eligible to invest in AIFs. However, they will have to meet the eligibility criteria.

What are Alternative Investment Funds?

Alternative Investment Funds AIF pool money from sophisticated private investors. Funds collected are invested according to the investment policy of the AIF. Securities and Exchange Board of India’s mutual fund regulations doesn’t govern AIFs. However, AIF in India has its regulation, Regulation 2 (1) (b) of the Regulation Act, 2012 of SEBI. An AIF in India can be established as a company, Limited Liability Partnership (LLP), corporate body, or trust.

AIFs invest in investments that are not traditional (for example, equities or fixed income). Securities and Exchange Board of India classifies AIFs under three broad categories. Namely, Category I AIF, Category I AIF and Category III AIF. Each of the categories has different investments as per the broad definition of the category. Some of them are private equity, venture capital, hedge fund, and angel fund etc.

The minimum investments and fees for AIFs are higher than conventional investments. It is difficult to value an AIF as the asset classes that they invest in are pretty rare. AIFs are illiquid as these investments are open only to limited investors. The transaction costs for AIFs are lower than traditional investments as the turnover is lower. AIFs don’t share any information relating to the fund publicly. Also, AIFs have less opportunity to advertise to potential investors.

What are the types of Alternative Investment Funds?

Securities and Exchange Board of India (SEBI) categorises Alternative Investment Funds into three broad categories. Investors can choose to register in any of the following three categories and subcategories thereof.

• Category I AIF:
  • Venture Capital Funds
  • Angel Funds
  • SME Funds
  • Social Venture Capital Funds
  • Infrastructure funds
• Category II AIF
  • Private Equity (PE) Funds
  • Real estate Funds
  • Funds for distressed assets
  • Debt Funds
  • Funds of Funds
• Category III AIF
  • Hedge Funds
  • Private Investment in Public Equity Funds (PIPE)

What are Category I AIFs?

Category I AIFs invest in startups or early-stage ventures or SMEs or social ventures or infrastructure or other sectors. The government or regulators consider these sectors as economically and socially desirable. Following are the subcategories under Category I AIF:

Venture Capital Funds

Venture capital funds primarily invest in startups and emerging businesses that have strong growth potential. Also, during the VCF launch, it specifies the sectors that the fund is targeting. Most importantly, venture capital is a kind of equity financing. In other words, VCFs provide funds to companies in exchange for an equity stake.

Additionally, venture capitalists also tend to participate in company operations. VCFs generate returns upon selling their stake in the companies. Also, angel funds are a subcategory of venture capital funds. Following are some of the key features of venture capital funds:

• They are close-ended funds and have a minimum tenure of three years. With the approval of the AIF unitholders, the tenure can be further extended to two years.
• With a minimum tradable lot of INR 1 crore, these can be listed on stock exchanges.
• Investment in a company cannot be more than 25%.
• The unit holder can invest in other subcategories of Category I AIF, but cannot invest in FoFs (Funds of Funds).
• VCFs cannot borrow funds directly or indirectly to run their business operations.

Angel Funds

Angel funds raise funds from angel investors. These funds comply with Chapter III-A of the AIF Regulations and make investments. Angel investors are persons who show interest in investing in angel funds and satisfy any one of the following conditions:

1. An individual investor with not less than INR 2 crore net tangible assets. The net tangible assets value excludes the value of their principal residence. And,
   • has early-stage investment experience, or
   • has experience as a serial entrepreneur, or
   • At least ten years of experience in a senior management professional role

Note:

Early-stage investment experience refers to prior experience in investing in emerging businesses or start-ups or early-stage ventures.

Serial Entrepreneur refers to a person who has experience in co-promoting or promoting more than one start-up venture.

2. A body corporate with a net worth of not less than INR 10 crore; or
3. An AIF registered under the regulations or a VCF.

Angel funds raise funds by issuing units to angel investors. Also, angel funds accept investments not less than INR 25 lakhs from an angel investor for a maximum period of three years.

SME (Small and Medium Enterprises) Funds

As the name suggests, SME funds invest in micro, small and medium enterprises that are listed or unlisted. These companies raise debt through NBFC. While SME funds provide equity financing for these companies. Following are some of the key features of SME Funds:

• Minimum investment of INR 1 Crore.
• Has a minimum lock-in period of three years. Additionally, an option to extend for two more years.
• To be classified as an SME AIF, a minimum investment of 75% has to be done. The investment has to be done in unlisted or proposed to be listed SME companies.

Additionally, SME funds generate returns when the company reports substantial growth or when the company gets listed. Also, when the fund delivers higher returns, say more than 8%, then the fund management team takes a share in the excess returns.

Social Venture Capital Funds

As the name suggests, social venture capital funds provide funding for businesses that positively impact lives. These businesses also offer reasonable returns to their investors. Moreover, these funds are most commonly known as impact funds. The fund manager of these funds analyses the social impact the business creates on society.

Following are some of the key features of Social Venture Capital Funds:

• Minimum investment of INR 1 crore.
• Lock-in period of three years, with an option to extend for two years.
• The fund has to invest a minimum of 75% of the assets in businesses that have a positive social impact.

Mostly, SVCFs do theme-based investing in India. For example, education, affordable healthcare, agriculture, and clean energy.

In addition to seed investment, social venture funds also provide technical and operational support to businesses. They also help in setting up the business, laying down compliance and governance procedures. Also, if necessary, they offer business connections and help in getting further funding.

Investors and the fund share the returns from the social venture fund. They follow the waterfall mechanism. As per this mechanism, firstly, the capital and hurdle rate is distributed among the investors. The hurdle rate is the minimum profit that is given. The excess returns are then distributed as per the terms in the scheme information document.

Infrastructure funds

Infrastructure funds primarily invest in firms that develop infrastructure projects. These funds raise capital from private investors. The infrastructure projects include railways, roads, water, municipal solid waste, and renewable energy. The Government of India offers incentives and concessions for investment in infrastructure funds.

Following are some of the key features of infrastructure funds:

• Closed-ended funds with a minimum lock-in of three years and an option to extend for two years.
• With a minimum tradable lot of INR 1 crore, these can be listed on stock exchanges.
• Investors can liquidate within one year after the fund tenure expiry.
• Investment in a company cannot be more than 25%.
• The unit holder can invest in other subcategories of Category I AIF, but cannot invest in FoFs (Funds of Funds).
• Infrastructure bonds are refrained from borrowing funds directly or indirectly to run their business operations.
• The fund allows only 1,000 investors per scheme.

What are Category II AIFs?

SEBI defines Category II AIFs as the funds that do not fall under  Category I and III and which do not undertake leverage or borrowing other than to meet day-to-day operational requirements. 

Following are the investment restrictions for Category II AIFs:

• Close-ended schemes with a minimum lock-in period of three years.
• Minimum corpus under each scheme is INR 20 crores.
• Minimum investment from an investor is INR 1 crore. However, for the employee or director of AIF, it is INR 25 lakhs.
• Funds in Category II can invest only in units of other AIFs or in unlisted companies.
• Except for Funds of Funds, they can invest in units of other AIFs.
• These funds can borrow only to meet temporary requirements. Category II Funds can borrow money only for a period of 30 days. Also, borrowing cannot be done more than four times in a year. The amount borrowed cannot be more than 10% of its investible funds.
• Category II AIFs can engage in hedging.
• By getting into an agreement with the merchant banker, the funds can invest in unsubscribed portions of an IPO.
• SEBI exempts these funds from Insider Trading Regulations. This exemption is valid only for investments in SME exchange. However, there is a minimum holding requirement of one year for such securities.
• The funds can invest 25% of the investible funds on investee overseas. However, with an overall capping of USD 500 million.
• The funds under Category II AIF should obtain valuations by an independent valuer every six months.
• Category II AIFs accept joint investment. However, the investment value cannot be less than INR 1 crore. The join investment can be made by the following:
  • Investor and his or her spouse
  • An investor and his or her parent
  • Investor and his or her daughter or son

The Government of India doesn’t give any incentive or concession for investment in these funds.

Following are the subcategories under Category II AIFs:

Private Equity (PE) Funds

Private Equity funds primarily invest in unlisted private companies. These funds take ownership of the company for their investment. Since unlisted private companies cannot raise capital through equity or debt instruments, they usually opt for PE funds.

PE funds usually have a fixed investment horizon. The lock-in ranges between four years to seven years.

Debt Funds

Debt funds under the Category II AIFs primarily invest in debt or debt securities. These investments are made in listed or unlisted investee companies as per the objectives of the fund. Therefore, debt funds invest in companies with good corporate practice and growth potential but facing a capital crunch.

By the SEBI regulation, money pooled by debt funds cannot be used for giving loans.

Funds of Funds

As the name suggests, funds of funds invest in various alternative investment funds. Funds of funds follow an investment strategy of investing in other AIFs. These funds do not make their own investment portfolio.

Furthermore, funds of funds under AIFs cannot issue units of the fund to the public.

What are Category III AIFs?

Category III AIFs apply diverse trading strategies and leverage by investing in listed and unlisted derivatives. They use arbitrage, derivatives trading, futures and margin trading strategies. Category III funds can be both close-ended and open-ended funds. They are less regulated than conventional investments. Hence they do not need to publish their information regularly. Also, the Government of India doesn’t give any incentive or concession for investment in these funds.

Following are the subcategories under Category III AIFs:

Hedge Funds

Hedge funds invest in domestic and international markets by pooling investments from private investors. These funds use multiple trading and investment strategies to invest the funds collected.

They hold both long and short positions in regular securities. And also hold positions in listed and unlisted derivatives. Hedge funds are aggressively managed and use leverage strategies.

They borrow to invest and can currently borrow up to 200% of the fund size. Hedge funds are pretty expensive as the fund management team charge a fee of 2% of the investment and take up to 20% share in the profits as fees.

Hedge funds are subject to higher market volatility. Hence the returns and the risk tends to be higher than traditional investments.

Private Investment in Public Equity (PIPE)

A long only fund of the Category III of AIFs is PIPE. Here the fund managers buy shares of publicly traded companies at a discounted price. This helps businesses to infuse capital into the business. Also, the regulations for funding the business through PIPE are less than going for a secondary issue.

PIPE transactions help medium and small-sized businesses to fund their projects with ease. PIPE transactions need less administration and paperwork when compared to a secondary (public) issue.

Also, the time taken to fund an issue through PIPE is way lesser than a secondary issue. Hence companies prefer PIPE even though the capital inflow is less due to discounting of the share price.

Who should invest?

Resident Indian individuals, Non-Resident Indians (NRIs) and foreign nationals can invest in alternative investment funds.

Also, there is a cap on investment by each investor. The minimum investment permitted is INR 1 crore. However, for directors, employees and fund managers of the AIF, the minimum amount is INR 25 lakhs.

Additionally, the funds restrict the number of investors per scheme to 1,000. However, for Angel funds, it is 49.

Additionally, it is essential to know that AIFs have a minimum lock-in of three years. Category I and II are close-ended funds, while category III can be either close or open-ended.

Therefore, investors who are willing to diversify their investment portfolio by fulfilling all the above requirements can invest in alternative investment funds.

Who are angel investors?

Angel investors are persons who show interest in investing in angle funds and satisfy any one of the following conditions:

1. An individual investor with not less than INR 2 crore net tangible assets. The net tangible assets value excludes the value of their principal residence. And,
   • has early-stage investment experience, or
   • has experience as a serial entrepreneur, or
   • At least ten years of experience in a senior management professional role

Note:

Early-stage investment experience refers to prior experience in investing in emerging businesses or start-ups or early-stage ventures.

Serial Entrepreneur refers to a person who has experience in co-promoting or promoting more than one start-up venture.

2. A body corporate with a net worth of not less than INR 10 crore; or
3. An AIF registered under the regulations or a VCF.

Angel funds raise funds by issuing units to angel investors. Also, angel funds accept investments not less than INR 25 lakhs from an angel investor for a maximum period of three years.

What are the taxation rules for AIFs?

Alternative Investment Funds are privately pooled investment vehicles. They collect money from sophisticated private investors. Following are the taxation rules of AIFs for each category.

Category I and Category II are pass-through vehicles. The fund doesn’t have to pay any tax on its earnings. However, the investors have to pay the tax at their respective tax slabs. If the fund has any capital gains on stocks, then the investors have to pay 15% or 10% depending on the holding period.

Category III AIFs are taxable at the highest income tax slab level (42.7%) at the fund level. The returns given to investors are after deducting the tax.

Who is the Sponsor of the AIF?

Sponsor(s) is a person(s) who has established the AIF. In the case of a company, a promoter is the sponsor. And in case of a Limited Liability Partnership, a designated partner is the sponsor. To ensure the good interest of the sponsor or manager is aligned with that of the investors, few regulations have been set up.

The sponsor/manager will have a certain continuing interest in the AIF. This will not be in the form of a fee waiver. For Category I and II, the sponsor/manager will contribute an amount not less than 2.5% of the corpus or INR 5 Cr, whichever is lesser. For Category III, the contribution will be 5% of the corpus or INR 10 Cr, whichever is lower. Also, for angel investors, this amount will not be less than 2.5% of the corpus or INR 50 lakhs, whichever is lesser.

Who is eligible to invest in AIF?

Investors who wish to diversify can choose Alternative Investment Funds to invest. However, they have to be eligible for the same.

Resident Indian individuals, Non-Resident Indians (NRIs) and foreign nationals can invest in alternative investment funds.

Also, there is a cap on investment by each investor. The minimum investment permitted is INR 1 crore. For angel investors, the minimum investment is INR 25 lakhs. However, for directors, employees and fund managers of the AIF, the minimum amount is INR 25 lakhs.

Can an AIF raise any amount of funds from any investor?

AIFs can raise money privately from sophisticated investors with a minimum investment value of INR 1 Cr. The investors can be Indians, including NRIs, PIOs and OCIs. The investors should be willing to invest in unlisted and illiquid securities to absorb the underlying risk.

Angel investors have a minimum investment of INR 25 lakhs. Any employee(s) or directors of the AIF can invest in the AIF with a minimum investment of INR 25 lakhs.

Frequently Asked Questions

Introduction

With the growing fraudulence in the financial sector, and to trace any suspicious behaviour it has become very important to keep proper records of customer. CKYC norms were introduced to curb the illegal activity that ruins the financial sector. This helps in knowing the customer better. This further helps in keeping the investment secured.

KYC, replaced by CKYC (Central Know Your Customer). The earlier KYC norms had a separate KYC format for different institutions. However, with the introduction of CKYC, the customer need not go through the KYC process again with any other institution.

Complete Central KYC once done exempts you from going through the whole process again with another institution. This has reduce the burden of the investor from going through the KYC process all over again

What is CKYC?

CKYC is the abbreviation for Central Know Your Customer. It is a centralised repository that stores or saves all the personal details of the customer. Earlier, there was a separate KYC process for every financial entities. The Central Government launched CKYC. This helps to bring all the KYC processes on a single platform. 

Hence, if verification of an investor’s complete Central KYC is done, he is not needed to go through the same process again. In case he desires to invest in some other financial institute. The data is thereafter stored digitally in one central server. This data is accessible to all authorized financial entities. The financial institution can use the data as required.  

The Central Registry of Securitisation and Asset Reconstruction and Securities Interest of India (CERSAI) manages CKYC Registry. The Union Budget of 2012-13 announced the CKYC. And subsequently, thereafter it commenced in July 2016.

Central KYC or CKYC is an initiative by the Government to bring the KYC process of all financial entities under a single window. CKYC norm requires all individual investors are to fulfil KYC requirements.

Features of CKYC

CKYC registry helps the financial entities skip the lengthy process of onboarding customers. They make all the relevant information about the customer available under the same window. This further helps in saving a lot of time and labour. 

Before the introduction of CKYC, opening a bank account was an ordeal.  One had to run around to gather documents as per the requirement of the financial institute. This took a lot of time and energy. However, if you want to invest in some other financial institute, you have to again go through the same process of documentation. 

Therefore, with the introduction of CKYC, the customer need not go through the same pain of documentation. The data is stored under one roof. This data is further available for the authorized financial organisations to have access to it. This helps both the customer and the financial institute skip the hassle of documentation.
The following are the features of CKYC :

• CKYC is a 14 digit number which is linked with the customer’s ID proof.
• The data is then safely stored in electronic format.
• The document submitted is then verified with the issuer
• All the concerned institutions are notified when there is a change in the KYC details.

How does CKYC Work?

It has now become mandatory to complete central KYC before you make any investment. This helps in knowing the customer better and further securing the investment. The financial institution saves the KYC records of customers. This further helps in curbing any fraud and suspicious behaviour in the financial sector. 

Prior to the investment with any fund house, the customer has to fill the KYC form. The CKYC form needs to be filled and submitted with related documents. CERSAI further verifies the KYC documents.

The KYC documents verified by CERSAI is stored digitally in one server. The customer is allotted a 14 digit number which is linked with his ID proof. This number will be the KYC verified number.  
Once the process is complete, the customer will not be asked for KYC again if he wishes to invest with some other fund house.

The Fund House can request CERSAI to make available the customer’s documents by furnishing the CKYC number. The data so stored is accessible to all authorized financial entities. The financial institution can use the data as required.

Types of CKYC Accounts

CKYC or Central Know your customer was introduced as per the directives of the Ministry of Finance. There are four types of CKYC accounts such as :

1. Normal Account: The account so created depends on the kind of document a customer submits. A normal account is created when any of the below-listed documents are produced by the customer as proof of identity. These documents are :

• PAN Card
• Aadhaar Card
• Voter ID Card
• Driving Licence
• Passport, or
• NREGA Job Card

2. Simplified Measured Account: This is another type of CKYC account. This account is created when the customer submits other valid documents (OVD). These documents are as per RBI Circular RBI/2015-16/42. These accounts are prefixed as ‘L’ by the KYC identifier.

3. Small Account: A small account is created if the customer submits only his personal details along with a photograph. These accounts are prefixed as ‘S’ by the KYC identifier.  

4. OTP Based eKYC Account: OTP based KYC is done online. This account can be created by submitting a photograph along with an Aadhaar card PDF file downloaded from the UIDAI website. These are then enabled by an OTP. These accounts are prefixed as ‘O’ by the KYC identifier.

Documents required for registration 

CKYC is not a lengthy process. All you need to do is submit the KYC documents required duly filled and attested. CERSAI verifies all documents once submitted.  

The documents once verified by CERSAI will then be stored digitally in one server. The customer is then allotted a 14 digit number linked with his ID proof. This number will be the KYC compliant verified number.  

Below is the list of the KYC documents required for registration in CKYC:-

• Duly filled CKYC form or KRA application form with signatures. A customer also has to fill supplementary CKYC form.
• One identity proof (self-attested)
• Address proof (self-attested)
• One photograph

Post verification of these documents by CERSAI a 14 digit number is linked with the ID proof. This number is the CKYC verified number. All the data is stored digitally and the fund houses will have access to these documents by producing the verified number. The customer does not need to go through the CKYC process again if he wishes to invest in some other financial institute.

How to check CKYC numbers online? 

Verification once complete, the customer can check his CKYC number through any financial services institute. Following these few simple steps :

• Firstly, Log on to the website of any financial services company that offers CKYC check. 
• Secondly. The customer has to enter his PAN number.
• Thirdly, the customer has to enter the security code displayed on the screen.
• Lastly, a number is displayed on the screen. This is the CKYC number.

The customer can note down his CKYC number for future use. This will enable him to save time when investing with any financial institute.

Benefits of Central KYC Registration 

Central KYC or CKYC has multiple benefits. From saving time to easy accessibility it covers it all.  To make investing easier and hassle-free, CKYC was introduced in February 2017. Investors Clients will have to complete the CKYC process once either with a bank, mutual fund or insurance company. They will not have to revisit the process of KYC again when investing with any other financial institute.
CKYC is a one time process. It is an easy process and saves a lot of time for the investors as well as the financial institute. The following are the benefits of CKYC:-

• CKYC saves time and energy. An investor once registered under CKYC does not have to go through the whole process of documentation again. While investing with any other financial institution, the onboarding process takes less time.
• CKYC once registered enables the financial company to verify the KYC documents of the investor easily. This onboarding process becomes hassle-free for both the investor and the financial institute.
• Investors also have access to their CKYC verification. They can update their details in the CKYC registry anytime with not much effort.
• CKYC is an easy process. Any investor can register by following simple steps.
• CKYC also helps in deterring money laundering and other illegal behaviour in the financial sector.
• This reduce the burden of the investment authorities.. Now retrieving the investment data has become much easier. This will also enable the authorities to know how many investments the customer holds.
• The Investor can use his CKYC number to buy or invest in various financial schemes. This applies to an insurance policy, mutual funds and stock markets.

What is the difference between KYC, eKYC and CKYC?  

KYC

Know Your Customer (KYC) is a regular process followed by all financial institutions. KYC is done to Identify an investor. Through this process, the identity of an investor is verified. The investor has to fill in the details on a form provided by the financial institution. The investor submits the filed form. This process is further supplemented by an In-Person Verification (IPV). Once the verification is complete the relevant investor data is stored with the KRA Registration Agency (KRA).

eKYC

eKYC or Electronic KYC is a regular process. In eKYC, verification is done with the help of an investor’s Aadhaar Card number. While completing the process of eKYC, the authentication of the investor’s identity can be done:

(a) Via One Time Password. (Limits investments to Rs 50,000 per year per mutual funds and mandates investments via the online electronic mode)

(b) Via Biometrics (No limits on the investment amount here unless those specifically imposed by the scheme / Fund House)

KRA then uploads the data digitally in its record.

CKYC

CKYC is an initiative of the Government of India. It was launched in February 2017.  CKYC is done in order to help investors to do their KYC only once while investing. It enables an investor to invest with any other fund house without going through the KYC process again.

CERSAI manages the CKYC process.. It allows investors to transact with all entities which are governed or regulated by the Government of India. The investor is free to transact with any RBI, SEBI, IRDA and PFRDA registered company without the need to complete multiple KYC formalities. This leads to an easy onboarding process. It allows for larger market participation by investors, whereby making their financial journey easy and hassle-free.

How can I update CKYC?

You can update the CKYC status online. To update your CKYC you have to follow the below-listed steps :

1. First, download the “change in KYC detail” from camskra.com. 
2. Second, fill the required field you would want to update and submit it to an intermediary you have a relationship with. The intermediary can be a mutual fund, bank or stockbroker.
3. Third, the intermediary uploads the data in the system of KYC – registration agency or KRA that is associated with it. You can also do the CKYC status check online

Presently, there are five KRAs. These agencies are responsible for doing your KYC and storing your records. These agencies are – 

• CAMSKRA (by Cams)
• CDSL Ventures Limited (a division of CDSL)
• NSDL Database management Limited (a subsidiary of NSDL) 
• DotEx International Limited (a unit of National Stock Agency)
• KARVY KRA (By Karvy)

You can check CKYC KYC status online by visiting any KRA websites.

What is the use of CKYC?

CKYC helps an investor to invest in Mutual Funds, or to purchase any financial product. A KYC identification number is provided. The number is then linked with the customer’s ID proof. The investor can use this number to invest in mutual funds.

CKYC verification once done, there is no requirement for the investor to go through the same process again while dealing with some other fund house. 

Frequently asked questions

Introduction

Kotak Bank offers FDs across maturity periods with varying interest rates. The fixed deposit offerings of Kotak Bank are across domestic, NRE and NRO accounts. The Kotak Mahindra Bank FD rates are higher than the rates on savings accounts. One can open an FD account both online and offline. Kotak also offers loan facility on FD. One can get up to 85% on the FD value as a loan. There is also a premature withdrawal facility for FDs with a penalty of 0.5%. This is only levied if the investment period exceeds 181 days.

Kotak Bank FD Interest Rates 2020

Kotak Mahindra Banks FD rates are given below.

Note: Kotak Bank revises fixed deposit rates periodically 

The interest for Kotak Mahindra Banks fixed deposit is calculated quarterly. The interest payment for the deposited amount is made at regular intervals or at maturity as per the investor’s choice. Any investment made in Tax Saving FDs of Kotak Bank qualifies for tax saving under section 80C of the Income Tax Act. Other than that, any investment made in Kotak FDs is not eligible for tax savings. A TDS of 10% is cut on interest if the interest income per annum is above INR 40,000 (INR 50,000 for senior citizens). Furthermore, if the investor doesn’t provide PAN details, the TDS would be 20% for interest above INR 40,000 (INR 50,000 for senior citizens). Also, the interest income is taxable at the rate of an individual’s income tax slabs.

Key Features of Kotak Bank Fixed Deposit

The features of Kotak Fixed Deposit are:

• Tenure: The FD tenure ranges between 7 days to 10 years
• Minimum Amount: The minimum amount to open an FD with Kotak Bank is INR 10,000.
• Maximum Amount: There is no maximum limit
• Senior Citizens FD Rate: Kotak offers a higher interest rate of 0.25% to 0.50% for senior citizens.
• Safety: The Deposit Insurance Scheme covers the deposits made with Kotak Bank. DICGC insures deposits up to INR 5,00,000.
• Loan against FD: Depositors can avail loan on their Kotak Bank FDs. This is to help the depositors to meet their financial requirements without having to break the FD.
• Overdraft: Overdraft facility up to 85% of the deposit amount is available.
• Nomination Facility: The Bank allows depositors to nominate beneficiaries.
• Auto Renewal: The Kotak bank provides auto renewal facility.
• Premature Withdrawal: The bank allows premature withdrawals. The option is to avoid breaking the FD.
• Sweep-in Facility: The facility provides the option of linking FD account to current account or savings account. Any deficits in the linked accounts will be recuperated with FD to maintain a minimum balance.
• Convenience: Depositors can easily open fixed deposits with Kotak Bank either online or by visiting the nearest bank branch.

Types of Fixed Deposits FD offered by Kotak Bank

• Regular Fixed Deposit
• Tax Saving Fixed Deposit
• Senior Citizen Fixed Deposit
• Ace Fixed Deposit

Types of Fixed Deposits: In Detail

Regular Fixed Deposit

• The regular fixed deposit account helps the depositor to earn higher returns when compared to holding the cash idle in the savings account.
• Maturity periods for these FD schemes range between 7 days and ten years.
• These FD schemes provide a sweep-in facility to maintain liquidity.
• These FD schemes also permit premature closure of the account and partial withdrawals.
• Also, the regular fixed deposit savings scheme provides an overdraft facility.
• The deposit can opt for either cumulative or non-cumulative (monthly or quarterly) interest payments.
• Resident Indian citizens, sole proprietorship firms, and HUFs can open a regular fixed deposit account.

Tax Saving Fixed Deposit

• Kotak Mahindra Tax Saving Fixed Deposit scheme investments quality for a tax deduction. Under Section 80 C of the Income Tax Act, depositors can claim a tax deduction for investments up to INR 1.5 lakhs.
• The fixed deposit scheme has a lock-in period of 5 years. Hence, the scheme doesn’t allow premature withdrawals.
• The minimum deposit for this Kotak FD is INR 100.
• Depositors cannot avail loan against deposits made in a Tax Saving FD account.
• One can choose to receive interest every quarter or get it compounded till maturity.
• The tax saving FD is available for senior citizens as well.
• Resident Indian citizens, minors, senior citizens, and HUFs can open tax saving fixed deposit accounts.

Senior Citizen Fixed Deposit

• The Senior Citizen FD is specially designed for senior citizens of society.
• This Kotak FD offers preferential interest rates to senior citizen depositors.
• The tenure of the deposit account varies between 7 days to 10 years.
• Minimum deposit amount is INR 5,000.
• The savings scheme permits premature withdrawals and partial withdrawals.
• Depositors can opt to receive interest monthly, quarterly or get it compounded till maturity.

FD account opening process

Kotak Bank FD can be opened online and offline. One can invest in Kotak Mahindra FD offline by visiting the nearest branch of Kotak Bank. The investors have to fill the FD application form with details like the type of FD, tenure, interest payouts frequency. Along with the application form, one has to submit necessary documents.

The online procedure is the same as offline, but instead of visiting the branch, one has to go to the Kotak bank’s website.

The documents required to open an FD in Kotak Bank are:

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhaar Card, Voter ID Card, Passport, Driving License)
• Signature proof (PAN Card, Passport, Driving License)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Senior Citizen ID Card (for senior citizens)
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Also, only eligible investors can invest in Kotak Bank FD. The eligibility criteria to invest in Kotak Bank FD is:

• Indian National
• NRIs and PIOs (Non-Resident Indians and Persons of Indian Origin)
• HUFs
• Senior Citizens and Minors

Loan against FD account

Kotak Bank provides a loan against FD and gets 85% of the loan value. The tenure of the loans is from 7 days to 7 years. These loans are usually quickly approved with minimum documentation. The FD will continue to earn interest even during the tenure of the loan. This enables the investors to earn interest on FD and at the same time use the FD as collateral for the loan.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using the loan EMI calculator. The loan EMI calculator works as a home loan calculator, personal loan EMI calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios by changing the car loan interest rate, personal loan interest rate, and home loan interest rate. 

Premature withdrawal

Kotak Bank allows investors to withdraw their FD investment prematurely. Investors can opt for the premature withdrawal, but they will have to pay the penalty for the same. Any FD which is held for less than 181 days, need not pay any penalty for withdrawing their FD.

However, if the FD is held with the bank for more than 181 days, then a penalty of 0.50% is charged. The investors will earn 0.5% less on their FD interest rate.

What is the tenure range for Kotak Bank Fixed Deposit?

The tenure range for Kotak fixed deposit is seven days to 10 years. The tenure breakdown is given below:

Who is eligible for opening an FD account in Kotak Bank?

Also, only eligible investors can invest in Kotak Bank FD. The eligibility criteria to invest in Kotak Bank FD is:

• Indian National
• NRIs and PIOs (Non Resident Indians and Persons of Indian Origin)
• HUFs
• Senior Citizens and Minors

What are the documents required to open an FD account in Kotak Bank?

The documents required to open an FD in Kotak Bank are:

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Signature proof (PAN Card, Passport, Driving License)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Senior Citizen ID Card (for senior citizens)
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

What is the current interest rate on FD in Kotak Bank?

The Kotak Mahindra Bank FD rates are higher than the rates on savings accounts. The interest for Kotak Mahindra Banks fixed deposit is calculated quarterly. The interest payment for the deposited amount is made at regular intervals or at maturity as per the investor’s choice. Also, the interest income is taxable at the rate of an individual’s income tax slabs.

The current fixed deposit rates of Kotak Bank are:

Kotak Bank FD rates for regular citizens:

• For a tenure of 7-14 days, it is 2.75%
• A tenure of 15-45 days it is 3%
• For 46-90 days it is 3.5%
• For 91-179 days tenure, it is 4.10%
• The FD rate for 180-389 days is 4.75%
• For 390 days to 23 months, it is 5.25%
• For 23 months 1 day to 1 year 11 months 29 days it is 5.15%
• 2 years to 3 years 364 days it is 4.9%
• 4 years to 4 years 364 days 4.75%
• Any FD with a tenure of 5-10 years is 4.50%

Kotak Bank FD rates for senior citizens:

• For a tenure of 7-14 days, it is 3.25%
• A tenure of 15-45 days it is 3.5%
• For 46-90 days it is 4%
• For 91-120 days tenure, it is 4.50%
• 121 days-176 days 4.6%
• The FD rate for 180-389 days is 5.25%
• For 390 days to 23 months, it is 5.75%
• For 23 months 1 day to 1 year 11 months 29 days it is 5.65%
• 2 years to 3 years 364 days it is 5.40%
• 4 years to 4 years 364 days 5.25%
• Any FD with a tenure of 5-10 years is 5%

To calculate the maturity amount of an FD investment, one can use a fixed deposit calculator. Scripbox’s fixed deposit calculator is available online and is free to use.

Is PAN mandatory to open a Kotak Bank FD account?

A PAN card isn’t mandatory to open a Kotak Bank FD account. However, there are a few implications for the same.

• Under section 206AA, TDS will be deducted at the rate of 20% instead of the regular 10%
• The bank will not issue any TDS certificate.
• Form 15G/H and other exemption certificates will be invalid and penal TDS will apply.

Can I open an FD account without holding a bank account with Kotak Bank?

Yes, one can open an FD in Kotak Bank without having a saving or current account in Kotak. The individual has to submit the following documents for the same.

• FD account opening form
• 4 passport size photographs
• Identity Proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Aadhar Card, Voter ID Card, Passport, Driving License)
• Signature proof (PAN Card, Passport, Driving License)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Senior Citizen ID Card (for senior citizens)
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Is the penalty changed for early withdrawal?

Kotak Bank allows investors to withdraw their FD investment prematurely. Investors can opt for the premature withdrawal, but they will have to pay the penalty for the same. Any FD which is held for less than 181 days, need not pay any penalty for withdrawing their FD.

However, if the FD is held with the bank for more than 181 days, then a penalty of 0.50% is charged. The investors will earn 0.5% less on their FD interest rate.

Can I take a loan against fixed deposit?

Kotak Bank provides a loan against FD and gets 85% of the loan value. The tenure of the loans is from 7 days to 7 years. These loans are usually quickly approved with minimum documentation. The FD will continue to earn interest even during the tenure of the loan. This enables the investors to earn interest on FD and at the same time use the FD as collateral for the loan.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using the loan EMI calculator. The loan EMI calculator works as a home loan calculator, personal loan EMI calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios by changing the car loan interest rate, personal loan interest rate, and home loan interest rate. 

What are the tax implications of fixed deposits?

5-year tax saving FDs and FCNR FDs (NRI FD) are the only two FDs whose investment qualifies for tax exemption. However, all the FDs are subject to TDS of 10%. TDS is charged only if the interest earned is above INR 40,000 and (INR 50,000 for senior citizens).  To know the interest earned is above or below the TDS threshold limit, one can use multiple bank FD calculators available online.

One can use the Income Tax Calculator to calculate their tax liability. Scripbox’s Income Tax Calculator is online and free to use.

Does Kotak Bank offer Recurring Deposits?

Yes, Kotak Bank offers recurring deposits for its depositors. The recurring deposits have a minimum tenure of 3 months and in multiples of three months until the maximum tenure. The maximum tenure of the recurring deposit is ten years. Depositors can open an RD account either by going to the bank branch or online using net banking. Below are the Kotak Bank RD interest rates for different tenures.

Note: Kotak Bank revises RD interest rates periodically

What is the average interest rate of FDs across Indian Banks?

The average interest rate of FDs across Indian Banks is around 5%. The average is calculated only for banks. The post office fixed deposit is not considered for the same. The interest for the post office fixed deposit is 6.7%

Frequently Asked Questions

Introduction

ICICI Bank offers diverse options of FDs for multiple tenures with different interest rates for regular and senior citizens. It offers FDs for both residents and NRIs. ICICI Bank FD Interest rates are higher than their savings bank interest rate. The FD tenure ranges from 7 days to 10 years. One can invest in ICICI Bank FD without having a bank account in ICICI Bank. Upon maturity, one can automatically renew their ICICI Bank FD. Also, one can opt for a loan against their ICICI fixed deposit and get up to 90% of the deposit amount as loan.

ICICI Bank FD Interest Rates 2020

The interest rate for ICICI Bank FDs is given below.

Note: ICICI Bank revises fixed deposit (FD) interest rates periodically 

The interest for ICICI Bank FD is calculated quarterly. The interest payment for deposited amounts is made monthly, quarterly, semi-annually, annually, or at the time of maturity as per investor’s choice. Investment in ICICI Bank FD doesn’t qualify for tax exemption under Section 80C of the Income Tax Act. However, tax savings FDs qualify for a tax exemption. A TDS of 10% is cut on interest if the interest income per annum is above INR 40,000 (INR 50,000 for senior citizens). Furthermore, if the investor doesn’t provide PAN details, the TDS would be 20% for interest above INR 40,000 (INR 50,000 for senior citizens).

Key Features of ICICI Bank Fixed Deposit

The features of ICICI Fixed Deposit are:

• Assured Returns: ICICI Bank FD offers a guaranteed return on investment
• Tenure: The FD tenure is between 7 days to 10 years
• Minimum Amount: The minimum amount to open an FD with ICICI Bank is INR 10,000 and INR 2,000 for Minors.
• Maximum Amount: There is no maximum limit
• Interest Rate: ICICI FD offers interest rates in the range of 2.50% p.a to 5.50% p.a
• Senior Citizens FD Rate: ICICI offers a higher interest rate for senior citizens. The rate varies between 3.00% p.a to 6.00% p.a
• Safety: The Deposit Insurance Scheme covers ICICI Bank deposits. DICGC insures deposits up to INR 5,00,000.
• Loan against FD: Depositors can avail loan on the ICICI Bank FDs. This is to help the depositors to meet their financial requirements without having to break the FD.
• Nomination Facility: ICICI Bank allows depositors to nominate beneficiaries for the deposits.
• Auto Renewal: The bank provides auto renewal facility of the FD account.
• Convenience: Depositors can open FD investment anywhere at any time at their convenience. FD can be opened through Internet Banking, iMobile, ATMs, Bank Branch or through Customer Care.

Types of Fixed Deposits FD offered by ICICI Bank

• Regular Fixed Deposit
• Tax Saver Fixed Deposit: Traditional & Reinvestment
• Money Multiplier Fixed Deposit
• ICICI Bank Golden Years Fixed Deposit
• Flexi Fixed Deposit
• Short Term
• Medium and Long Term

Types of Fixed Deposits FD: In Detail

Regular Fixed Deposit

• Regular FD provides depositors safety and flexibility. These fixed deposit schemes also earn returns based on the prevailing interest rates as declared by RBI.
• Interest payment is done only at the time of maturity.
• Depositors can avail loan facility up to 90%. Also, the scheme offers a nomination facility.
• The minimum amount is INR 10,000, and the tenure ranges between 7 days to 10 years.
• Additionally, these fixed deposit schemes provide an option for premature or partial withdrawal in case of emergencies.
• Resident Indian Citizens, HUFs, Trusts, Private and Public Limited Company, and Partnership Firms are eligible to open a regular fixed deposit account.
• The ICICI FD Interest Rate varies depending on the tenure of the deposit.

Tax Saver Fixed Deposit

• The tax saver FD offers assured returns and as well as tax saving benefit to its depositors.
• The scheme is eligible for tax deduction up to INR 1,50,000 under Section 80C of the Income Tax Act.
• Minimum Investment in the scheme is INR 10,000.
• The scheme has a fixed tenure of five years.
• Also, the tax saver FD doesn’t offer premature withdrawals or auto renewal facility.
• The interest earned is taxable.
• Resident Indians, senior citizens and non-resident Indians are eligible for opening tax saver fixed deposits.

Money Multiplier Fixed Deposit

• The Money Multiplier FD offers the benefits of both savings account and fixed deposit. The scheme provides liquidity benefits of a savings account and high interest rates of an FD.
• Minimum balance is INR 15,000.
• The minimum tenure for the scheme is one year for Savings Account customers.
• For individual customers, when the balance in the Savings Account falls below INR 10,000, the account is enabled for the automatic reverse sweep. For the reverse sweep, the FD is broken on Last-In, First Out basis.
• The deposit account is opened with an auto renewal option. The renewal is done for the same tenure as the original scheme tenure. The interest rate for auto renewal is based on the prevailing rate as on the date of renewal.
• Resident Indian Citizens, HUFs, Trusts, Private and Public Limited Company, and Partnership Firms are eligible to open money multiplier fixed deposit accounts.

ICICI Bank Golden Years Fixed Deposit

• The ICICI Bank Golden Years FD offers an additional interest rate of 0.30% per annum for fixed deposits above five years’ tenure.
• The additional rate is applicable on deposits renewed during the period and on fresh deposits as well. The FD tenure is between 5 years one day to 10 years.
• Applicable duration for the FD is May 20, 2020, to September 30, 2020.
• The scheme is applicable on single FD with an amount lower than INR 2 crore.
• The premature withdrawal facility is available with a penalty.

Flexi Fixed Deposits

• The Flexi fixed deposit scheme allows saving and current account holders to open a fixed deposit account. The minimum balance in the Flexi deposit account is:
• For current account holder – INR 20,000 (initial deposit)
• For savings bank account holder – INR 10,000 (initial deposit)
• Also, future deposits can be made in multiples of INR 5,000.
• Additionally, the minimum balance to be maintained in savings and the current account is INR 10,000 and INR 25,000, respectively.
• Moreover, the scheme charges a penalty of INR 100 if the minimum balance isn’t maintained in the account.
• The flexi FD can be opened for a minimum of 15 days and a maximum of 91 days.
• The interest rate applicable is the same as that of a term deposit.
• Also, the fixed deposit scheme offers auto-renewals and nomination facility.

Short Term Fixed Deposit

• Short term fixed deposits allow investors to invest money for as short as seven days and up to 289 days. However, the interest rate varies with duration.
• The interest rate for short term deposit ranges between 2.5% p.a to 4.75% p.a. Also, the interest rate varies for senior citizens and is between 3.00% p.a to 5.25% p.a.

Medium and Long Term Fixed Deposit

• ICICI Bank offers multiple FDs for tenures ranging between one to ten years. Also, the interest varies with tenure.
• For one-year FD, the interest rate is 5.15% p.a, and for senior citizens, it is 5.65% p.a.
• For 18 months to three years is 5.35% p.a. and for senior citizens id 5.85%
• Also, for three years to five years the rate is 5.50% p.a. and for senior citizens is 6%
• Five years to 10 years the rate is 5.50% and for senior citizens is 6.30%

FD account opening process

To open an ICICI Bank FD offline, visit the nearest branch of ICICI Bank and take an FD application form and fill it. While filling the form, one has to select the type of FD, the tenure and interest payout frequency. Submit the same with all the necessary documents.

To open an ICICI bank FD online, log in to ICICI Bank website and select the FD to invest in. Proceed with filling the application form with all the necessary details. Submit the form along with all the necessary documents.

The documents required to open an FD in ICICI Bank if one doesn’t have a savings account with ICICI Bank are:

• 2 Photographs
• Identity Proof as per KYC norms. (PAN Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Voter ID Card, Passport, Driving License)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Senior Citizen ID Card (for senior citizens)
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

In addition to the above documents, one has to fill the FD application form. Also, only eligible investors can invest in ICICI Bank FD. The eligibility criteria to invest in ICICI Bank FD is:

• Resident Individual
• Partnership Firms
• Private and Public Companies
• NRIs and PIOs (Non Resident Indians and Persons of Indian Origin)

Loan against FD account

ICICI Bank allows investors to take a loan against their FD investment. Investors get a loan up to 90% of FD amount. The interest rate on loan is 1-2% above the ICICI FD Interest Rate. The FD as collateral for the loan. The loan tenure is limited to the tenure of the FD. One cannot take a loan against tax saving FDs.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using the loan EMI calculator. The loan EMI calculator works as a home loan calculator, personal loan calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios by changing the car loan interest rate, personal loan interest rate, and home loan interest rate. 

Premature withdrawal

Premature withdrawal of ICICI Bank FDs is allowed. However, one has to pay the penalty to avail a premature withdrawal facility. The penalty is in the form of interest. For ICICI the penalty is 0.5%-1%. The investors will earn 0.5%-1% less on their FD interest rate.

What is the tenure range for ICICI Bank Fixed Deposit?

The tenure range for ICICI fixed deposit is seven days to 10 years. The tenure breakdown is given below:

What is the minimum amount that I have to give for opening a Fixed Deposit with ICICI Bank?

ICICI Bank offers six types of FD schemes. They are given below along with the minimum investment of each plan:

• Fixed Deposit (regular plan) – INR 10,000
• Fixed Deposit (without premature withdrawal facility) – INR 1 Cr
• Tax-Saver FD – INR 10,000
• Fixed Deposit with Monthly Income option – INR 1 lakh
• Money Multiplier Plan – INR 5,000
• FD Xtra suite of products – INR 2 lakh

There is no limit on the maximum investment amount.

Who is eligible for opening an FD account in ICICI Bank?

Only eligible investors can invest in ICICI Bank FD. The eligibility criteria to invest in ICICI Bank FD is:

• Resident Individual
• Partnership Firms
• Private and Public Companies
• NRIs and PIOs (Non Resident Indians and Persons of Indian Origin)

What are the documents required to open an FD account in ICICI Bank?

The documents required to open an FD in ICICI Bank if one doesn’t have a savings account with ICICI Bank are:

• 2 Photographs
• Identity Proof as per KYC norms. (PAN Card, Voter ID Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Voter ID Card, Passport, Driving License)
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Senior Citizen ID Card (for senior citizens)
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.
• In addition to the above documents, one has to fill the FD application form.

What is the current interest rate on FD in ICICI Bank?

The current fixed deposit rates of ICICI Bank are:

For regular citizens:

• For a tenure of 7-29 days it is 2.5%
• A tenure of 30-90 days it is 3%
• For 91-184 days tenure it is 4.10%
• The FD rate for 185-289 days is 4.5%
• For 290 days to less than 1 year, it is 4.75%
• For 1 year one day to less than 18 months, it is 5.15%
• 18 months to 3 years it is 5.35%
• Any FD with a tenure of 3-10 years is 5.50%

For senior citizens:

• For a tenure of 7-29 days it is 3%
• A tenure of 30-90 days it is 3.5%
• For 91-184 days tenure it is 4.6%
• The ICICI bank FD rate for 185-289 days is 5%
• For 290 days to less than 1 year, it is 4.25%
• For 1 year one day to less than 18 months, it is 5.65%
• 18 months to 3 years it is 5.85%
• 3-5 years the interest rate is 6%
• Any FD with a tenure of 5-10 years id 6.3%

To calculate the maturity amount of an FD investment, one can use a fixed deposit calculator. Scripbox’s fixed deposit calculator is available online and is free to use.

Is PAN mandatory to open an ICICI Bank FD account?

A PAN card isn’t mandatory to open an ICICI Bank FD account. However, there are a few implications for the same.

• Under section 206AA, TDS will be deducted at the rate of 20% instead of the regular 10%
• The bank will not issue any TDS certificate.
• Form 15G/H and other exemption certificates will be invalid and penal TDS will apply.

Can I open an FD account without holding a bank account with ICICI Bank?

Yes, one can open an FD in ICICI Bank without having a bank account in ICICI. The individual has to submit the following documents for the same.

• Fixed Deposit application form
• Pan Card or a declaration in Form No. 60 or 61 of the Income Tax Act
• Identity Proof as per KYC norms. (PAN Card, Voter ID Card, Aadhar Card, Passport, Driving License)
• Address proof as per KYC norms. (PAN Card, Voter ID Card, Aadhar Card, Passport, Driving License)
• Senior Citizen ID Card (for senior citizens)
• 2 Photographs
• Any other documents as applicable for partnership, proprietorship, company, HUF, association or institution.

Can I take a loan against a fixed deposit?

ICICI Bank allows investors to take a loan against their FD investment. Investors get a bank loan up to 90% of FD amount. The interest rate on loan is 1-2% above the FD interest rate. The FD as collateral for the bank loan. The loan tenure is limited to the tenure of the FD. One cannot take a loan against tax saving FDs.

Loans such as loan against property (home loan), business loan, an education loan, etc., can be taken against an FD. The loan interest rate varies based on the bank and type of loan. One can always calculate their loan EMI using the loan EMI calculator. The loan EMI calculator works as a home loan calculator, personal loan calculator and car loan calculator. The investor can also use this EMI calculator in multiple scenarios by changing the car loan interest rate, personal loan interest rate, and home loan interest rate.

Does ICICI Bank offer Recurring Deposits?

Yes, ICICI Bank offers recurring deposits for its depositors. The recurring deposits have a minimum tenure of 180 days. The maximum tenure of the recurring deposit is ten years. Depositors can open an RD account either by going to the bank branch or online using net banking. Below are the ICICI Bank RD interest rates for different tenures.

Note: ICICI Bank revises RD interest rates periodically 

Does ICICI Bank offer Recurring Deposits?

Yes, ICICI Bank offers recurring deposits for its depositors. The recurring deposits have a minimum tenure of 180 days. The maximum tenure of the recurring deposit is ten years. Depositors can open an RD account either by going to the bank branch or online using net banking. Below are the ICICI Bank RD interest rates for different tenures.

Note: ICICI Bank revises RD interest rates periodically 

What are the tax implications of fixed deposits?

5-year tax saving FDs and FCNR FDs (NRI FD) are the only two FDs whose investment qualifies for tax exemption. However, all the FDs are subject to TDS of 10%. TDS is charged only if the interest earned is above INR 40,000 and (INR 50,000 for senior citizens).  To know the interest earned is above or below the TDS threshold limit, one can use multiple bank FD calculators available online.

One can use the Income Tax Calculator to calculate their tax liability. Scripbox’s Income Tax Calculator is online and free to use.

Frequently Asked Questions