Karnataka Bank FD Interest Rate

Karnataka Bank provides a variety of fixed deposit (FD) schemes with differing interest rates to cater to the varying needs of its customers. Investors can start an FD with Karnataka Bank with as little as ₹100. 

Let's discuss the types of FD offered by Karnataka Bank in detail:

Fixed Deposit

Karnataka Bank's fixed deposit scheme is an ideal choice for individuals who seek regular income in the form of interest payouts. 

• The tenure for the FD ranges from 7 days to 10 years
• The minimum deposit amount is as low as ₹100. There is no maximum deposit limit for this scheme. 
• The bank offers loan facilities to depositors; however, the terms and conditions of the bank are applicable.
• Depositors can choose to receive their interest payouts quarterly, half-yearly, or yearly, as per their preference.
• A monthly interest payout is available at a discounted rate. For monthly interest, the minimum deposit required is ₹5,000 and the minimum period of one year. However, there is no discounting of interest for Senior citizens (age 60 years and above).
• Karnataka Bank also provides a nomination facility to the depositors, allowing them to nominate a beneficiary for their deposit.
• Premature withdrawal is permitted under this scheme, but the bank's rules regarding the same are applicable. 

Soulabhya Deposit

This scheme is named Twin Gain scheme. It is designed to provide convenience and flexibility to depositors. The scheme offers easy withdrawal of money, while the remaining balance earns interest at the contracted rate. 

Depositors can choose between two options at the time of deposit, and once selected, the option is irrevocable.

Option 1: 

• Initial deposit accepted for 46/30 days or as decided. Deposit renewed automatically with interest for 38/59 blocks of 46/30 days each, until notified otherwise. Option chosen initially cannot be changed. Interest rate determined by Head Office at renewal. Deposit can be withdrawn in units of ₹1,000 during currency.
• Interest rate for each renewal will be as per the rate prevailing on the renewal date, as decided by the Head Office. Interest will be calculated at the completion of each 46/30 day block.
• The depositor can withdraw the deposit amount any time in multiples of ₹1,000 but no interest is paid in respect of units withdrawn before completion of the 30 days block. 
• The depositor will obtain the consent letter of automatic withdrawal. 

Option 2:

• The period of deposit is specified by the depositor, which can be minimum 3 months and maximum 60 months. 
• Interest will be credited to the respective deposit account on a quarterly basis, with compounding done quarterly.
• The rate of interest during the time of deposit will continue till the due date.
• The depositor may withdraw the deposit amount in units of ₹1,000 as needed, before the agreed upon period.
• The bank provides loan facilities to depositors under this scheme, but the terms and conditions of the bank are applicable.
• Karnataka Bank offers a nomination facility to the depositors, allowing them to nominate a beneficiary for their deposit.

Abhyudaya Cash Certificate 

The Abhyudaya Cash Certificate (ACC) scheme is a suitable option for investors who prefer a lump sum payout after a specific period and do not require regular interest payouts. This scheme reinvests the quarterly interest back into the deposit.

• The tenure for this scheme ranges from 6 months to 10 years
• The minimum deposit amount is ₹100, with multiples of ₹100 thereafter. There is no maximum limit for deposits under this scheme.
• Under this scheme, quarterly interest accrued is ploughed back so that the deposit earns compound interest at quarterly intervals.
• The bank offers loan facilities to depositors under this scheme, but the terms and conditions of the bank are applicable. 
• Premature withdrawals are allowed under this scheme, but the bank's rules regarding the same are applicable. 
• Karnataka Bank provides a nomination facility to the depositors, allowing them to nominate a beneficiary for their deposit.

Tax Planner 

Karnataka Bank's Tax Planner scheme is one of the excellent options for investors who want to combine their investments with tax savings. This scheme provides tax benefits of up to ₹1.5 lakhs for the deposits made under Section 80C of the Income Tax Act of 1961.

• The Tax Planner scheme is available in both Fixed Deposit and Abhyudaya Cash Certificate schemes. 
• If the depositor chooses the Fixed Deposit option, then the interest will be paid every quarter or every month. In the case of payment of monthly interest, interest will be paid at a discounted rate as applicable to the domestic fixed deposit scheme.
• If the depositor chooses the Abhyudaya Cash Certificate option, then the interest will be payable at the time of maturity and interest will be compounded quarterly.
• The lock-in period for this scheme is five years
• The minimum deposit amount is ₹100, with multiples of ₹100 thereafter. Depositors can deposit a maximum up to ₹1.5 lakhs per annum to claim tax benefits.
• Karnataka bank does not offer loan facilities or premature withdrawals under this scheme. 
• The bank provides a nomination facility to the depositors, allowing them to nominate a beneficiary for their deposit.

• Period:  The period of the FD with Karnataka Bank ranges from 1 week to a maximum of 10 years.  
• Convenient: Having a savings account in Karnataka Bank allows one to open fixed deposits easily, and they can be liquidated whenever required.
• DICGC insurance: The amount invested with the Karnataka Bank is covered by DICGC for the total sum of ₹5 lakhs. 
• Minimum amount: Fixed deposits with Karnataka Bank can be opened with an investment as low as ₹100. 
• Preference to senior citizens: Senior citizens who have reached the age of 60 years Karnataka Bank gives a monthly interest payment without any deductions.
• Tax benefits: Karnataka Bank’s Tax Saving FD offers exemptions under Section 80C, of the Income Tax Act of 1961 thus helping to save taxes.   
• Auto-renewal option: The Bank offers an auto-renewal option for their FDs. It means at the time of maturity of the FD, it gets renewed automatically. This is helpful for investors as they do not have to renew their FDs manually. 
• Nomination facility: Depositors can nominate beneficiaries for their investments made in Karnataka Bank FDs.

• Not dynamic: Interest rates on FD are not dynamic. So, it fails to overcome the risk of inflation. 
• Fixed rate: Fixed deposits offer a fixed rate on the investment. Hence, no benefit can be availed for higher returns in cases of an increase in market interest rates.

To invest in Karnataka Bank fixed deposits, the following are eligible:

• Individuals
• Proprietary concerns
• Partnership firms
• Private and Public Limited Companies
• HUFs
• Specified Associates
• Societies
• Trusts
• Departments of Authority created by the Government (Central or State)
• Limited Liability Partnership, etc.

The following documents are required to invest in Karnataka Bank fixed deposits:  

• FD application form
• Government-approved identity proof (PAN Card, Aadhar Card, Driving License, Voter ID, Passport)
• Government-approved address proof (Aadhar Card, Voter ID, Electricity Bill, Telephone Bill)

Fixed deposit accounts can be opened in both online and offline methods: 

Online Method: 

Step 1: Visit the official website of Karnataka Bank. 

Step 2: Login to the website 

Step 3: From digital banking tab choose ‘Internet Banking’ and then choose ‘Online fixed Deposit (FD/ACC/RD) account opening facility

Step 4: Click on ‘Apply now’.

Step 5: Fill out the required details and submit the form. 

Step 6: Enter the OTP received on the mentioned mobile number. 

Step 7: Click on ‘Confirm’. 

Step 8: The form is submitted, and a bank representative will contact you related to further proceedings. 

Offline Method:

Step 1: Visit the bank branch.

Step 2: Take the FD application form. 

Step 3: Fill in the required details and submit the necessary documents. 

Step 4: Submit the form to the branch. 

• For premature closure of the term deposit, the depositors need to sign and submit the term deposit receipt along with the request letter
• Presently premature closure penalty on domestic term deposits below ₹2 crores is waived

As per the Income Tax Act of India of 1961, taxpayers can seek deductions under Section 80C if they invest in FDs.

In a given financial year, a taxpayer can avail tax deduction to a maximum of ₹1.5 lakhs from their gross taxable income, provided the following conditions are fulfilled:

• Taxpayers can invest in FD either through public or private sector banks. 
• Individuals and HUFs can avail tax deductions by investing in tax savings FDs. 
• Bank's five year tax saving FD offers exemptions under Section 80C. 
• Investors cannot get loans against these FDs. 
• In case of joint holders, only the first holder can get tax benefits.

At the time of filing the Income Tax Returns (ITR), the taxpayer can provide supporting documents to avail tax benefits on FDs.

Tax Deducted at Source (TDS)

• TDS will be deducted on the interest accrued on the FDs if the interest is more than ₹40,000 (₹50,000 for senior citizens) in a given financial year. 
• For Resident customers, If you have submitted your PAN card details then the deduction will be at 10% per year on the interest. Without a PAN card, the bank will deduct 20% TDS per year.