India: Fixed Deposits and Recurring Deposits

Fixed Deposits (FDs) and Recurring Deposits (RDs) are among the most popular savings products in India, valued for safety and predictability.

Fixed Deposit (FD)

• A lump sum locked with a bank for a fixed term (7 days to 10 years) at a fixed rate.
• Guaranteed return; capital protected (bank deposits are insured up to a limit per bank).
• Tax-saving FDs (5-year lock-in) qualify under Section 80C.

Recurring Deposit (RD)

• You deposit a fixed amount every month for a set term at a fixed rate — ideal for building a habit from regular income.
• Same safety as an FD, suited to those without a lump sum.

Tax note

Interest on FDs and RDs is taxable as income, and banks may deduct TDS above a threshold. See India taxation.

Where they fit

• Excellent for short-term goals and the safe portion of a portfolio.
• Returns may trail inflation after tax, so they're less suited to very long-term wealth-building than equities.

Key takeaway

FDs and RDs offer rock-solid safety and certainty — perfect for goal-dated and emergency money. For long horizons, pair them with growth assets so inflation doesn't erode your returns.