PROJECT 7

FIXED DEPOSIT

Fixed deposits are a safe investment option that will assure a consistent interest rate, special interest
rates for senior citizens, multiple interest payment options, no market risks, and income tax
deductions.

Before forming a new FD or also renewing an existing one - it is critical to evaluate the most recent
fixed deposit rates offered by the country's top banks. Here are the most recent fixed deposit rates for
2023.

FD INTEREST RATE

One of the best ways to secure your money is by investing in fixed deposits which not only helps you
to save money but also helps you to earn a substantial interest in it. Competitive Bank FD interest
rates help the depositor to get a good Return on Investment over a fixed tenure. Under the fixed
deposit scheme, the depositor deposits the money only once at the time of opening the account. The
interest rates offered depends on the bank, deposit amount and the tenure you choose.

At the end of the tenure, the interest accrued is calculated on the principal amount and the total
amount is paid back to the depositor. The tenure of fixed deposits may range from 7 days to 10 years.
In the next section, we have enlisted some of the banks that offer competitive interest rates.

Banks provide a comparatively lower rate of interest on bulk deposits exceeding Rs. 1. crore and
higher rates on deposits less than 1 crore. DHFL Bank is one of the highest interest offering banks
and provides an interest rate of up to 9.25% for fixed deposits. The fixed deposit interest rates are
determined by changes in the RBI monetary policy such as the repo rate, base rate, internal liquidity
position of banks, credit demand, economic conditions, etc. The factors on which the bank FD rates
vary are the deposited amount, deposit tenure, and the type of depositor.
Small Finance Banks and NBFCs offer the highest FD interest rates. Following them are PSU Banks
and large Private Sector Banks. However, Private Sector Banks like Bandhan Bank, DCB Bank,
Tamilnad Mercantile Bank, RBL Bank, IDFC First Bank, IndusInd Bank, Yes Bank, SBMBank,
CSB Bank and Federal Bank offer higher FD slab rates than the fixed deposit rates offeredby other
Private Sector Banks. FD interest rates of scheduled banks range from 2.50% p.a. to 9.00% p.a. for
the regular depositors for tenures ranging from 7 days to 10 years. Senior citizens are usually offered
an additional interest of 0.50%-0.75% p.a. above the applicable FD card rates.

GUARANTEED RETURNS ON INVESTMENT

FD interest rates booked at the time of opening an Fixed Deposit account remains the same till its
maturity, regardless of any changes in the banks’ FD card rates in the interim. For instance, ifan
individual opens a bank fixed deposit of 3 years tenure at 6% p.a., the interest rate will remainthe
same till the completion of its 3 years tenure. This offers a high degree of income certainty in FDs,
even higher than those offered by most small saving schemes.

CAPITAL PROTECTION

Fixed deposits booked with the scheduled banks are covered under the deposit insurance program of
DICGC, a subsidiary of RBI. The insurance cover is applicable on cumulative bankdeposits, which
include fixed deposits, savings account, recurring deposits and current account,of up to Rs 5 lakh per
bank per depositor, in case of bank failure.
TAX DEDUCTION UNDER SECTION 80C

Many banks and NBFCs offer 5-year tax-saving FD scheme with lock-in period of 5 years. The
principal component of up to Rs 1.5 lakh each financial year can be claimed as tax deductions u/s
80C of the Income Tax Act. However, the interest component is taxed as per the tax slab of the
depositor.

LOAN AGAINST FIXED DEPOSIT (FD)

Depositors can leverage their FDs to avail loans. Loans against FD are usually offered in the form of
overdraft facility, wherein the credit limit is sanctioned on the basis of the Fixed Depositamount
pledged as collateral and the interest is also levied only on the amount drawn till its repayment.
Moreover, the borrower continues to earn interest on the pledged FDs during the loantenure.
Withdrawals can be made anytime up to the credit limit from their overdraft account and repay it as
per their repayment capacity. These features of loans against FDs make them an excellent tool for
mitigating frequent liquidity and cash flow mismatches, without requiring prematurely closing FDs
and incurring premature withdrawal penalties.

In India, Fixed Deposits are one of the most popular ways to save money. They are a safeinvestment,
offer good returns, and are easy to open.

So, what exactly is a Fixed Deposit?

In a Fixed Deposit, you put a lump sum in your bank for a fixed tenure at an agreed rate of interest.
At the end of the tenure, you receive the amount you have invested plus compoundinterest.
Here I’ll deposit 2lakh given to me in different banks to find where I can get highest return

RETURN AFTER 24
ORGANIZATION AMOUNT INTEREST RATE
MONTHS

GOVERNMENT BANKS 50000 6.9% 70,392

PRIVATE BANKS 25000 5.3% 32,520

NON BANKING FIN

50,000 9.10% 78,408
COMPANIES

POST OFFICE SCHEME 75,000 8.2% 1,12,544

GOVERNMENT BANK PRIVATE BANK

Bank : State bank of India Bank : HDFC

Type of customer : Normal Type of customer : Normal

Type of fixed deposit : Cumulative Type of fixed deposit : Cumulative

Amount : 50,000 Amount : 25,000

Date of deposit : 19/03/2023 Date of deposit : 19/03/2023

Date of maturity :19/03/2028 Date of maturity :19/03/2028

Tenure : 5 years Tenure : 5 years

Interest Rate : 6.9% Interest Rate : 5.3%

Total Interest : 20,392 Total Interest : 7,520

Maturity Value : 70,392 Maturity Value : 32,520

[Total amount I get after 5 years] [Total amount I get after 5 years]
NBFC SENIOR CITIZEN SAVING
SCHEME
Finance : Shriram Finance

Type of customer : Senior citizen

Type of customer : Normal

Type of fixed deposit : Cumulative

Type of fixed deposit : Cumulative

Amount : 75,000
Amount : 50,000

Date of deposit : 19/03/2023

Date of deposit : 19/03/2023

Date of maturity :19/03/2028

Date of maturity :19/03/2028

Tenure : 5 years
Tenure : 5 years

Interest Rate : 8.2%

Interest Rate : 9.10%

Total Interest : 37,544

Total Interest : 28,000

Maturity Value : 1,12,544

Maturity Value : 78,408

[Total amount I get after 5 years]

[Total amount I get after 5 years]

THE FORMULA TO DETERMINE FD MATURITY AMOUNT

There are two types of FD that you may avail of – simple interest FD and compound interest FD

Grow has calculators for both types of FD.

The fixed deposit calculator for simple interest FD uses the following formula –M = P + (P x r x
t/100), where –

 P is the principal amount that you deposit

 r is the rate of interest per annum
 t is the tenure in years
For example, if you deposit a sum of Rs. 1,00,000 for 5 years at 10% interest, the equation reads

M= Rs. 1,00,000 + (1,00,000 x 10 x 5/100)

= Rs. 1,50,000

For compound interest FD, the FD return calculator uses the following formula –M= P + P {(1 +
i/100) t – 1}, where –

 P is the principal amount

 i is the rate of interest per period
 t is the tenure
For example, if you take the same variables, the compound interest FD will accrue,M= Rs. 1,00,000
{(1 + 10/100) 5-1} Or, Rs. 1,61,051
ADVANTAGES OF THE FIXED DEPOSITS

 EASY AVAILABILITY
The Fixed Deposit scheme is available to all the public and private sector banks in India. You
can open the FD, through internet banking as well. There is no need to go to the bank for opening
FD if you have the KYC or "Know Your Customer" formalities done at the bank.

 GUARANTEED RETURNS
FD offer greater interest than the saving accounts. The rate varies between 7 % to 8 %. The interest
gains of an FD also vary with its tenure, so that a long-term FD accrues better interest gains.
The fixed deposit interest rate comparison charts, available online, will revealto you which bank is
offering the greatest of returns.

 TAX EXEMPTION
The original monetary amount, which the depositor deposits in the FD, is exempt from taxation,
under the Section 80C of the Income Tax Act. FDs are a widely used tax saving option by both
salaried individuals and workers, and the business persons. The section offersan exemption of up
to Rs 1.5 lakhs, towards an FD deposit.

Note: In order to save taxes, you should deposit the FD for a minimum period of 5 years. The
maximum deposit limit, relating to tax exemption is Rs 1.5. lakhs.

 PROVIDES FOR PARTIAL WITHDRAWALS

Some banks offer the FD schemes that provide for the partial withdrawals. The balance thatremains
in the FD account after withdrawal gets the same interest. These FDs are hence morelucrative and
can be used to withdraw money, in times of need and crisis.
  AUTOMATIC RENEWAL
FDs can also be renewed automatically. You do not even need to go to the bank for itsrenewal, as
it can be managed through the internet banking.

 ANY NUMBER OF FDS CAN BE OPENED

One can open any number of FDs at a bank or at multiple banks. The FD is a great way to invest the
money that one saves. The interest gained will be exempt from taxation until it reaches the Rs 1.5
lakhs exemption limit.

 LOAN FACILITY
An FD can also be used for getting a loan. The loan facility helps the depositor to get the finances
when he or she requires them. The loan may extend up to 90% of the principal andthe interest that
has been accrued on it.

DISADVANTAGES OF THE FIXED DEPOSITS

 INTEREST ARE TAXED UPON

All interest gained on the fixed deposits are fully taxed upon. The income is denoted under the
head “Income From The Other Sources" when you file your ITR to Income Tax Returns.

There are other financial instruments available, which provide you the benefit of tax -free
savings. The PPF and the government bonds, are a few of them.

 TDS TAXATION
Interests gained from a FD are also charged with TDS. Banks reduce it from the interest accrued
at the end of each year. However, the depositor has the option to opt out of TDS, and pay all the
interest at the maturity. The form 26 AS, is linked to the PAN card of the depositor and shows all
the TDS deductions made towards the FD.
 PROJECT 8

HOUSING LOAN

Buying a house is one of the biggest dreams come true for most people and an extravagant affair
altogether. Imparting life to such a dream requires a lot of effort from the buyers’ end and the best
one can do to accommodate the home in their budget is through a home loan.

A home loan can be opted to buy a new house/flat or a plot of land where you construct the house,
and even for renovation, extension, and repairs to an existing house.

TYPES OF HOUSING LOAN

 Home Loan
 Home Construction Loan
 Home Extension Loan
 Home Improvement Loan
 Composite Home Loan
HOME LOAN

This is the most common type of home loan availed to purchase a house. There are many housing
finance companies, public banks, and private banks that offer housing loans where you borrow
money to purchase the house of your choice and repay the loan in monthly instalments.You can get
up to 80%-90% of the house’s market price in the form of financing. The lender will hold the house
until you completely repay the loan.

HOME CONSTRUCTION LOAN

This is the right home loan type if you already have a plot of land and you need financing to
construct a house in that land.

HOME EXTENSION LOAN

Say you already own a house and you would like to extend the house with another room or another
floor to accommodate the growing family. Home extension loan provides financing for this purpose.

HOME IMPROVEMENT LOAN

A home improvement loan provides financing for renovating or repairing the house if there’s any
fault in the existing system, such as painting the house’s interior or exterior, plumbing, upgrading the
electrical system, waterproofing the ceiling, and more.

COMPOSITE HOME LOAN

This type of home loan provides financing for purchasing the plot of land where you would like to
construct a house and for the construction, both within a single loan.
 BENEFITS OF TAKING A HOME LOAN

TAX BENEFITS

 The foremost benefit of a home loan is the income tax deduction you can claim on the
interest and principal repayments. You can claim up to Rs.1.5 lakh on principal repayments
u/s 80C, up to Rs.2 lakh on interest repayments u/s 24B, up to Rs.2 lakh on interest
repayment in special circumstances u/s 80EE and 80EEA, and up to Rs.1.5 lakh on stamp
duty expenses u/s 80C.

LOWER INTEREST RATE

 The home loan interest rate is much lower as compared to any other loan types available. If
you come across a cash crunch, you may get a top-up on the existing home loan at a lower
interest rate than a personal loan to solve the issue.

LONG REPAYMENT TENURE

 Unlike any other loans, home loans come with longer repayment tenure, as much as 25-30
years. This is owing to the significant loan amount one will have to borrow to purchase a
house.

NO PREPAYMENT PENALTY

 When you take a floating-rate home loan, you can make prepayments towards the loan
whenever you have a lump sum at hand without having to pay any prepayment penalty. This
will help you close the home loan much before the set loan tenure.

HOME LOAN INTEREST RATES

 The average home loan interest rates are from 6.5% to 12.00% in India as of March 2021.
The rates usually vary from lender to lender, RBI-prescribed repo rate, inflation, economic
activities, and many other factors.
 ELIGIBILITY

Banks have a list of eligibility criteria for home loans. The first thing banks look at is one’s credit
history to understand their repayment habits. Typically, a credit score of 750 and above is preferred.
Some other important factors taken into account are as follows:

 Age
 Employment Type
 Minimum Annual Salary
 Collateral Security
 Margin Requirements
 Assets, liabilities, stability, and continuity of occupation
 Residency status (Resident Indian/ Non-Resident Indian)
 DOCUMENTS REQUIRED

Businessmen/Non-Salaried
Agriculturists Salaried Customers
Professionals

Application form with

Application form with photograph Application form with photograph
photograph

Identity and Residence proof Identity and Residence proof Identity and Residence proof

Last 6 months bank

Last 6 months bank statements Last 6 months bank statements
statements

Processing fee cheque Processing fee cheque Processing fee cheque

Copies of Title Documents of

Educational Qualifications Certificate
Agricultural Land depicting Latest Salary Slip
and Proof of Business
Landholding

Copies of Title Documents of Business Profile and Previous 3 years

Form 16
Agricultural Land depicting crops Income Tax returns (self and business)

Statement of previous 2 years of Previous 3 years Profit/Loss and

loans availed Balance Sheet
 HOUSING LOAN FOR GOVERNMENT EMPLOYEE
ANNUAL INCOME RS.10 LAKH

When it comes to applying for a home loan, government employees enjoy certain privileges. A
secured job with a stable salary makes them suitable borrowers. While getting a home loan for
government employees is simple, it can also be overwhelming with so many options available.

HOME LOAN BENEFITS FOR GOVERNMENT EMPLOYEES

The following are some of the perks that you can enjoy as a government employee when you
apply for a housing loan:

COMPETITIVE INTEREST RATES

If you are eligible for a housing loan, you may get a loan at a lower housing loan rate interest.
However, if you are a government employee, you can get a loan at even lower rates. Female
government employees in particular get up to 0.05% as a concession on the home loan interest
rate.Such benefits make it even more favourable for government employees to apply for a home
loan.

ZERO PROCESSING FEES

To qualify for a housing loan for government employees, you have to fulfil the laid out house
loan eligibility criteria. Eligible loan applicants will get the loan sanctioned faster without
waiting for days to get approval.

MINIMAL PAPERWORK

Home loans for government employees require the applicant to submit only a few documents
online. This facilitates faster approval and disbursal process.
HOME LOAN ELIGIBILITY FOR GOVERNMENT EMPLOYEES

 The eligibility criteria for a smooth application process for housing loan for government
employees requires:
 You must be an Indian citizen between the age of 23 and 62 years
 You must have a work experience of at least 3 years
 You must have a CIBIL score of 750 or above

HOW TO APPLY FOR A HOME LOAN FOR GOVERNMENT EMPLOYEES

To enjoy the home loan benefits for government employees, follow the steps mentioned below
when applying:

 Step 1: Go to the bank’s website, choose the ‘Home Loan’ option, and simply click on the
‘Apply Now’ button
 Step 2: Enter basic contact information and the One Time Password (OTP) received on
your registered mobile number
 Step 3: Input your personal, financial and property details to complete your application
process

Then the information that you shared with the portal will undergo a verification process. If
verified successfully, the lender will credit the loan amount into your bank account within a
week. The rest of the instalments will follow as per the disbursement schedule.
 DOCUMENTS REQUIRED FOR A HOME LOAN FOR

GOVERNMENT EMPLOYEES

Mentioned below are the documents required to apply for a housing loan for government
employees:

1. INDIVIDUALS DOCUMENTS

 Home loan application form completely filled with 3 passport-size photos

 Identity card of your employer
 Aadhaar card / Passport/ Driving licence
 Address Proof: Latest copy of Electricity bill / Telephone bill / Water bill / Gas bill

2. PROPERTY DOCUMENTS

 Permission of property construction (If at all applicable)

 Registered Agreement of Sale / Stamped Agreement for Sale
 Occupancy Certificate (If the loan is for a ready-to-move property)
 Share certificate (Applicable for Maharashtra State), maintenance bill, electricity bill and
property tax bill
 Allotment papers

3. INCOME PROOF FOR SALARIED APPLICANTS

 Form 16 or your latest salary slip for the last three months
 Bank account statements for the previous six months
 I-T department-acknowledged tax returns of the past 2 years,If the applicant has taken
any loans in the recent past, loan account statements of the past 1 year
 HOUSING LOAN FOR BUSINESS MAN
TURN OVER RS.50 LAKH

SELF-EMPLOYED? YOU ARE ELIGIBLE TOO

Self-employed entrepreneurs can get home loans with as much ease as those with salaries or regular
incomes. Lenders have designed home loan products specifically tailored to meet the requirements of
the self-employed.In general, there are two categories of self-employed individuals: professionals
and non-professionals.

 PROFESSIONALS include doctors, engineers, lawyers, CAs, MBAs, etc., who are
educationally qualified in their domain and have set up their own businesses.

 SELF-EMPLOYED NON-PROFESSIONALS include traders, contractors, commission

agents,etc. and are not educationally qualified in their area of business
 ELIGIBILITY TO APPLY

Self-employed individuals are eligible to apply for home loans, either individually or jointly. While
all proposed owners of the property will have to be co-applicants, all co-applicants need not be co-
owners. Usually, co-applicants are close family members.Key factors considered by the lender are:

INCOME AND REPAYMENT CAPACITY OF THE APPLICANT

For this purpose, lenders require 3 years’ IT returns and at least 2 years’ audited Profit and Loss
Account Statements and Balance Sheets of the business entity.

PROFILE OF THE APPLICANT

The lender assesses the home loan application based on certain individual parameters like:

 APPLICANT’S AGE : The younger you are, the more time you have to repay your loan
and longer the home loan tenure you can apply for. Older applicants may need to make a
larger down payment towards the home purchase.

 EDUCATIONAL QUALIFICATIONS : Some lenders use educational

qualifications as a parameter for assessing the eligibility of the customer.

 NUMBER OF DEPENDANTS : The amount of disposable income is an important

factor in assessing the applicant’s ability to repay the home loan. It is assumed that higher the
number of dependants, lower is the applicant’s disposable income and vice versa.
 D O C UME N T S RE Q UI RE D

The following are the important documents that all the applicants/co-applicants need to submit along
with the signed application form for the loan approval:
 Proof of identity (Passport, Voter Card or Adhaar Card Copy)
 Proof of residence (Passport, Voter Card, Adhaar Card, Bank Account Statements, Property
Tax Receipts, Utility Bills)
 Proof of income (IT Returns, PAN Card, TAN Card, Current Account Statements)
 Certified financials (Audited Profit and Loss Account and Balance Sheet)
 Property related documents (Copy of the Property Purchase agreement)

T E R MS A ND CO N DI T I O NS
Indicated below are the broad terms and conditions applicable to home loans for self-employed
applicants:

TENURE OF THE LOAN

The maximum tenure for home loans under adjustable rates can stretch up to 30 years. In case of
fixed rate home loans, the maximum tenure is 20 years.

AMOUNT OF LOAN
The amount of loan approved by the lender will depend on a number of factors such as the
customer’s repayment capacity, age, etc. Indicated below is the maximum amount the lender would
offer depending on the cost of the property:
 90 percent of the property cost – loan amount up to Rs. 30 lakh
 80 percent of the property cost – loan amount between Rs. 30.01 lakh and Rs. 75 lakh
 75 percent of the property cost – loan amount above Rs. 75 lakh

INTEREST RATES
Lenders offer two kinds of interest rate options – fixed and adjustable.
ADJUSTABLE RATE HOME LOAN
It is linked to the lender’s benchmark or Retail Prime Lending Rate (RPLR). The rate is revised
every quarter depending on any change in the RPLR. If the interest rate changes, it usually results in
a change in your home loan tenure, with or without a change in EMI.

FIXED RATE HOME LOAN

Here, the interest rate remains the same as the rate determined at the time of loan disbursement.
However, it remains fixed for a stipulated period of 2/3/10 years, after which the loan automatically
gets converted to adjustable rate.Some lenders allow customers to switch between fixed and
adjustable rates depending on certain conditions.

REPAYMENT OPTIONS

TRANCHE BASED EMI

 If you purchase a property under construction, the EMIs start only after the full disbursement
of the home loan. Until then, you have the option to pay interest only on the amount drawn
and start paying the EMIs once the entire loan amount is disbursed.

ACCELERATED REPAYMENT

 This option facilitates increase in the EMI payment as your income increases, resulting in the
faster repayment of the loan.

TELESCOPIC REPAYMENT

 This option allows you to extend the tenure up to 30 years, enhancing the loan amount you
are eligible for or reducing the amount of EMIs.