BackShould you invest in Axis Bank’s Fixed Deposit Plus?
Axis Bank launched a new fixed deposit scheme that offers a higher rate of interest as compared with its regular FD for a tenor of up to two years
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Earlier this week, Axis Bank Ltd launched a new fixed deposit (FD) scheme, Fixed Deposit Plus, that offers a higher rate of interest as compared with its regular FD for a tenor of up to two years.
The rate on this product is 10 basis points higher than a regular FD. One basis point is one-hundredth of a percentage point. While a regular FD offers 8.2% per annum, you will get 8.3% in FD Plus. If you choose to receive periodic interest payments on a quarterly basis, interest is calculated and paid on quarterly basis.
Domestic and non-resident Indian customers as well as companies can invest in this FD. The minimum that can be invested is ₹ 15 lakh at one go.
It comes with a minimum lock-in period of one year, but can be continued for a maximum period of less than two years. This means you will have to stay invested till the end of the tenor. Regular bank FDs can be terminated prematurely by paying a penalty.
Premature withdrawals will be allowed only in exceptional cases, such as in the event of death or if a company announces bankruptcy, winding up, or based on directions by a court of law or regulators.
There is no auto renewal option available under this deposit scheme.
In February, the Reserve Bank of India (RBI) had proposed to allow non-callable deposits since premature withdrawal of deposits results in asset-liability management issues. In April, RBI allowed banks to offer differential interest rates and offer deposits without the option of premature withdrawal.
If you find the premium on these deposits attractive and are sure that you will not need the money for some time, then you can consider this product.
However, financial planners do not think the premium is enough. “10 basis points is too low for investing an amount as high as ₹ 15 lakh and to let go of the flexibility," said Suresh Sadagopan, a Mumbai-based financial planner.
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