The bank offers 6.25 percent to 6.70 percent interest for tenures ranging from six to 12 months
Recently, Axis Bank rolled out a new ‘Express FD,’ a digital Fixed Deposit (FD) scheme. It allows a non-Axis Bank customer to invest online for the short term (six to 12 months) without having to open a savings account. The plain old bank FD is a favourite for a large majority of Indians and coming from one of India’s largest private sector banks, the reliability too is high, which is important given the recent developments in the space.
Should you invest in the FD? Here are the pros and cons for you to make an informed decisions.
What is it about?
Even a non-Axis Bank customer can open an Express FD account by investing a minimum of Rs 5,000 up to Rs 90,000. The tenure for investment is 6 to 12 months. The interest rate for Express FD will be the same as applicable to regular deposit accounts of the same tenure. The bank offers 6.25 percent to 6.70 percent interest.
To invest in the ‘Express FD,’ you must have a valid permanent account number (PAN) and Aadhaar. Also, your Aadhaar number should be linked to registered mobile number. This is essential because ‘Express FD’ is opened using an Aadhaar-based one-time password (OTP). There are no issuance fees for opening the FD with Axis Bank.
A customer can deposit the amount in this scheme online through the net-banking facility of any other bank, debit-card or via the Unified Payments Interface (UPI).
A non-Axis Bank customer can invest in this online FD and the minimum investment amount is kept low at Rs 5,000. Interest rates in this scheme are competitive and kept equivalent to regular FD accounts for non-Axis Bank customers.
The bank allows withdrawal of up to 25 percent of the FD amount without any penalty charges during investment tenure. So, the FD can be useful for parking a part of your emergency funds. On maturity, the amount will be credited to the bank account (non-Axis) within three working days.
What doesn’t work?
“Axis Bank is promoting ‘Express FD’ as a new scheme, but its features are not new in the industry since other banks are already offering this facility to non-bank account holders,” points out Shalini Gupta, Co-founder and Chief strategy officer of MyLoanCare.in. Private banks such as Kotak Mahindra Bank and ICICI Bank already have this online feature for non-account holders.
A non-Axis bank customer can invest for a maximum for 12 months and there is a cap of Rs. 90,000 in "Express FD" scheme which is as per the allowable regulatory guidelines. To existing customers, Axis Bank allows FD opening of any amount and tenure using digital modes like internet banking and mobile App. Praveen Bhatt, EVP - Retail Liabilities & Direct Banking Channel Products, Axis Bank explains, “We have launched Express FD scheme, offering online services to our new-to-bank younger customers who are digitally savvy and are looking for short-term investment in FDs.”
Says Shalini, “Now-a-days, small as well as established banks who can’t reach out to a majority of the salary account holders have been offering FDs to non-account holders at an attractive interest rates since it’s an easier way to get an entry to the customer for cross-selling of other bank products which includes credit cards, loan schemes, etc.” So, you need to be cautious about the cross-selling trap. You should do all the comparison and due diligence with offerings from other banks before opting any cards or loan schemes.
For pre-mature withdrawal of the entire amount, the interest rate shall be one percent below the fixed deposit rate.
Moneycontrol’s TakeFor non-savings account holders, sticking to established banks is a safe option for parking deposits. Investing in Axis Bank ‘Express FD’ is a useful facility if you do not have access to large and established banks in your locality. Further, it is advisable to have FDs in multiple banks for diversity and safety.The Great Diwali Discount!
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