BANKING AFFAIRS

Detailed explanation-1: -A Term Deposit, also called Fixed Deposit (FD), is a deposit provided by NBFCs (non-banking financial companies) and banks. In a Term Deposit, one is allowed to deposit a lump sum amount with a financial institution or bank for a particular period and at a pre-decided interest rate.

Detailed explanation-2: -A term deposit is often used when the deposit is extended for a certain period, say 3 months, 6 months etc. Fixed deposits, on the other hand, are used when the deposit is for a period of 6 months or greater than that. The deposit amount offers a higher rate of return as compared to the banks’ savings accounts.

Detailed explanation-3: -A common example of a fixed-term investment is a term deposit in which the investor deposits his or her funds with a financial institution for a specified period of time and cannot withdraw the funds until the end of the time period, or at least not without facing an early withdrawal penalty.