Fixed deposits are perhaps one of the most common investment instrument used by common men. The biggest advantage provided by fixed deposits is that it provides option to grow your wealth at a low level of risk. As the name entails, Fixed Deposits are deposits of money for a fixed tenure. As a reward to part with your money, the deposit acceptor provides an interest. The interest rate provided on a deposit varies with the tenure of a deposit and the credit worthiness of the deposit acceptor. Hence it would be a common experience to find that the interest rate offered by Banks for fixed deposit would be less than that interest rate offered by Companies for the same deposit tenure as the credit worthiness of banks is better than that of the Companies.
In the current situation fixed deposits are offered by the following:
- Retail Banks;
- Non-Banking Finance Companies (NBFCs);
- Housing Finance Companies;
- Manufacturing Companies; and
- Government Companies.