Net banking and mobile apps make the entire process easy and smooth
Fixed deposits (FDs) are the preferred investments for a large section of our people. Investors of all hues park their surplus in FDs. Usually, a visit to your bank’s branch is necessary for opening a deposit account. With the lockdown, a physical visit becomes challenging or even impossible in some places. But what if could open an FD account fully online? State Bank of India, Bank of Baroda, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, IDFC First Bank and a few others give the option of investing online.
Here are the steps to follow for investing in an FD online. Other common procedural aspects on documentation and taxation too are answered.
What is the procedure for investing in bank FDs online?
If you already have a savings account with the bank, log in to your internet banking facility or mobile banking app. Select ‘investments’ and choose ‘fixed deposits.’ The wordings may differ with banks, but the process is mostly similar. Next, fill the online form with details of the tenure, interest payout (monthly, quarterly, half yearly or on maturity), investment amount, permanent account number (PAN) and nominee details. After providing these details, the amount gets debited from your bank account and your investment is completed.
You can instantly download the fixed deposit receipt for your records. While investing, check the interest rates provided by the bank as per your investment tenure.
If you want to invest in an online FD of a bank in which you don’t hold an account, then you need to upload documents such as photo identity, address proof, PAN card in the bank’s website and complete you’re the know your customer (KYC) process online. You will have to upload these documents along with an online form.
Is a minimum tenure or amount required?
Yes. The minimum tenure and investment amount vary from bank to bank. State Bank of India (SBI) insists on a minimum tenure of seven days. Similarly, DBS Bank’s tenures for fixed deposit range from seven days to five years. At SBI and DBS Bank, you need to invest a minimum of Rs 1,000 and Rs 5,000 respectively.
I am a senior citizen. Can I avail additional rate of interest while investing online in fixed deposit schemes?
Yes, senior citizens are eligible for additional rate of interest as set by the bank while investing online. As a senior citizen, you will get additional interest rate in the range of 15-50 basis points while investing in fixed deposits as per your bank’s policy. The date of birth in the bank's record will be considered for age calculation while investing. In the case of joint accounts, the first holder should be a senior citizen to qualify for additional rate of interest.
Can I invest online in fixed deposits for tax exemption under section 80C of income tax?
Yes, banks do provide the facility to invest in five-year tax-saving FDs online. You can invest up to Rs 1.5 lakh to take tax benefit under section 80C of the income tax act.
Are my online fixed deposits insured?
Yes. Your online fixed deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the Reserve Bank of India (RBI), for up to Rs 5 lakh.
Can I encash my online fixed deposit investment before the maturity date?
Yes, you can terminate your online fixed deposit scheme at any time during the investment tenure. However, a certain amount may be required to be paid by the depositor as a penalty to the bank. This usually ranges between 0.5 per cent and one per cent for premature withdrawal of fixed deposits. Some banks such as IDFC First do not penalize senior citizens for premature withdrawal. You can manage your fixed deposit investments via net banking and mobile app facilities provided by the bank.
You can prematurely withdraw online fixed deposits from your bank branch as well. Make sure you carry a printout of your online fixed deposit. Fill and submit the premature withdrawal form with necessary details such as depositor’s name, bank account details and fixed deposit number, among others.
What happens when my fixed deposit scheme matures?
When your fixed deposit investment is close to maturity, you have the option of renewing or redeeming the proceeds. Some banks such as DBS send you text messages on your registered phone number and even email ID, intimating you about your FD’s maturity.HDFC Bank gives you the option of reinvesting the whole amount or transferring the interest earned to your savings account and reinvesting the principal back into the FD or withdrawing the amount on maturity. You don’t need to do anything closer to maturity. But reinvestments are done at prevailing FD rates. You can give an instruction to renew the online fixed deposit from a bank branch before maturity by filling the renewal form.