Eligibility Criteria and Documents Required for Fixed Deposits: All You Need to Know

A fixed deposit (FD) is an investment avenue that gives you a fixed rate of return on your investment, irrespective of market volatility. You can open a fixed deposit account with a financial institution (bank/NBFC) and invest for a predetermined tenure. Your investment would continue earning returns even when the market falls or turns volatile.

However, to open an FD account, you need to meet the prescribed eligibility parameters and submit the required documents for fixed deposits.

Let’s understand the eligibility criteria and the documents required for fixed deposits at major banks in India.

What are Fixed Deposits?

In simple terms, fixed deposits are investments that give a fixed rate of return on a lump sum invested for a specified period. You choose the amount you want to invest and the tenure of the deposit. The interest rate is fixed based on these choices. You earn this interest rate throughout the deposit tenure. Even if the financial institution changes the interest rate after opening the fixed deposit account, you will continue to receive the same interest rate as promised when you first opened the account.

Some features of fixed deposits are:

• The money stays deposited with the financial institution for the chosen deposit tenure.
• Senior citizens enjoy a higher rate of interest on their deposits.
• If you withdraw your fixed deposit before the term ends, you will incur a fee for premature withdrawal. This fee reduces the effective return that you get on the fixed deposit.
• Bank fixed deposits are secured by RBI up to Rs.5 lakh even if the bank goes bankrupt.
• Banks and post offices offer 5-year tax-saving fixed deposit schemes. If you invest in these schemes, you can claim a deduction of up to Rs. 1.5 lakhs from your net taxable income under Section 80(C) or the Income Tax Act. This would help you simultaneously reduce your tax liability while building a savings corpus.

Also Read: Experience financial growth with unmatched Bajaj Finance FD Rates

Eligibility Criteria for Fixed Deposits

The following entities are eligible to open a fixed deposit account with a bank/NBFC in India:

• A resident Indian citizen
• Non-Resident Indians (NRIs)
• Hindu undivided families
• Clubs
• societies
• Partnership firms
• Associations
• Sole-proprietorship businesses
• Public or private companies
• Trusts
• Government departments

There is no age limit for opening a FD account, a minor of any age can open a fixed deposit account through their legally appointed guardian. However, please note that while minors older than 10 years may independently open a savings bank account, banks can fix limits in terms of age and amount for independent operation of FD accounts by minors.

There is also a requirement for a minimum investment amount. This amount varies for different financial institutions. Some banks/NBFCs might require a minimum deposit of Rs. 5,000, while others might allow you to open an account with as little as Rs. 100.

As far as the tenure of the deposit is concerned, you can choose a tenure between 7 days and ten years.

Documents Required for Fixed Deposits

You need to furnish basic KYC documents along with the account opening form for opening a fixed deposit account. Let’s have a look at the documents required for fixed deposits:

For existing customers

If you have another account and are an existing customer of the bank/NBFC, usually, you are not required to submit any documents as the bank/NBFC already has all your KYC documents. You can simply start your FD through either net banking or by submitting a simple application form at your nearest bank/NBFC branch. 

For new customers

If you are a new customer, the following documents for fixed deposits will be needed:

• Recent, coloured passport-sized photographs
• Identity proof: driving licence, PAN card, Aadhaar card, passport, voter’s ID card, etc.
• Address proof: driving licence, Aadhaar card, passport, voter’s ID card, latest utility bills, rent agreement, property deed, etc.

For Public/Private limited companies

If any public or private limited company opens a fixed deposit account with a financial institution, the following documents for fixed deposits shall be required:

• The PAN card of the company
• Certificate of registration or incorporation of the company
• Latest bank account statement
• Latest utility bills for address proof
• The KYC documents of the authorised signatories of the company
• The Board Resolution that permits the opening of the fixed deposit account
• Passport-sized photographs of the authorised signatory are required to open the account for the company

For the Hindu Undivided Family (HUF)

HUFs can submit the following documents for fixed deposit account opening:

• The deed and declaration of the HUF
• PAN Card of the Karta
• KYC documents of the Karta include the following:
  • Identity proof – driving licence, PAN card, Aadhaar card, passport, voter’s ID card, etc.
  • Address proof – driving licence, Aadhaar card, passport, voter’s ID card, latest utility bills, rent agreement, property deed, etc.
• Passport-sized photographs of the Karta

For Trusts

Trusts looking to open an account would have to submit the following documents for fixed deposits:

• Copy of the Trust Deed
• Registration Certificate of the Trust
• Board resolution that permits the opening of the fixed deposit account
• Passport-sized photographs of the authorised signatory are required to open the account for the company

For Registered Societies

Registered societies have to provide the following documents for opening a fixed deposit account:

• PAN card of the society
• KYC documents of all the authorised signatories of the society
• Bank account statement for the last few months
• Latest utility bills for address proof
• Certificate of registration or incorporation of the society
• Copy of the Memorandum of Association
• Copy of the Articles of Association
• Board resolution that permits the opening of the fixed deposit account
• Passport-sized photographs of the authorised signatory are required to open the account for the company

How to Open a Fixed Deposit Account?

There are two ways to open a fixed deposit account. These modes and their respective procedures for opening a fixed deposit account are as follows:

Opening a Fixed Deposit Account Offline

You can open a fixed deposit account offline by visiting the nearest branch of the bank/NBFC you wish to start an FD with. You will need to submit the requisite documents (mentioned above) along with the duly filled application form to a bank official. The payment for the fixed deposit can be made either in cash or with a cheque.

Opening a Fixed Deposit Account Online

Many banks and financial institutions offer the facility for opening a fixed deposit account online. It is simpler and more convenient, and the account is also opened instantly. To open an online account, you have the following options:

• If you are an existing customer, you can log into your net banking account and open a fixed deposit account.
• You can also download the mobile app of the bank or financial institution and open an account through your smartphone.
• You can visit the official website of the financial institution and apply for the account opening if you are a new customer.
• You must fill out an online account opening form and upload the relevant documents when applying as a new customer online. You must also pay the deposit amount online through digital payment channels.

Conclusion

Fixed deposits can be a suitable investment option if you want a debt component in your investment portfolio. With guaranteed returns and immunity from market volatility, you can save up for your financial goals and create a secured corpus. Moreover, you can also opt for the tax-saving fixed deposit schemes offered by banks to reduce your tax liability.

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