The Life Savers Called Online FDs

The one good think about fixed deposits is the absolute predictability of returns, as long as they are not closed prematurely. Add to this that unlike a lot of other fixed income instruments, fixed deposits are available for all tenures upto 10 years, and you can now use fixed deposits to design your own financial products.

The only drawback is the extremely low deposit insurance  in India.The Deposit Insurance and Credit Guarantee Corporation provides insurance to each customer of a Scheduled Bank for deposits up to Rs 1 lakh in case of  bank failure. This limit is applicable across all the deposits, including savings, current, fixed and recurring. This limit remains Rs 1 lakh even if the sum of all deposits (including accrued interest) exceeds the same. Worse, non-scheduled banks ,companies and other institutions offering fixed deposits don’t provide this small comfort either. Of of what use is predictability of returns if basic security and return of capital is not guaranteed ? Read more of this post