As more people are becoming financially aware of so many investment schemes to choose from to maintain their financial ability, they are choosing the best ones suited to them to get a good ROI (Return on Investment). A high rate of returns is what investors look for while investing their hard-earned money. Investing in a term deposit involves depositing funds into a financial institution account for a predetermined period. Term deposits often have minimum deposit requirements that vary in length and have short-term maturities that might range from a month to a few years. When purchasing a term deposit, the investor must be aware that their money can only be withdrawn once the period has ended.
Term deposits can be classified into short-term and long-term deposits, depending on the investment’s holding period. The lock-in period for the short-term deposit can last anywhere from one to twelve months. For investors who are looking for rapid returns, these deposits are ideal. Conversely, a lock-in time ranging from one to ten years is a feature of long-term deposits. The interest rate on these deposits is higher than that of short-term deposits.
By December 2023, the proportion of these investment instruments to total bank deposits rose to 60.3%, as per the Reserve Bank of India data. In March 2023, this percentage was 57.2 percent.
Term deposits accounted for almost 97.6% of all deposits from April to December 2023 when measured incrementally. The percentage of deposits made into savings and current accounts (CASAs) decreased over this time. The Quarterly Basic Statistics Returns BSR-2: Deposits in Scheduled Commercial Banks- December 2023 report from the RBI provided this information.
RBI further said that funds are being deposited in the higher interest rate category. The share of term deposits with interest rates above 7 per cent in total term deposits increased to 61.4 per cent in December 2023. This data was 54.7 per cent a quarter before and 33.7 per cent in March 2023. The central bank said that women’s share in total credit is less but it is increasing strongly. This has left behind the growth of loans given to men in the last seven quarters.
Investing in a term deposit involves depositing funds into a financial institution account for a predetermined period. Term deposits often have minimum deposit requirements that vary in length and have short-term maturities that might range from a month to a few years. When purchasing a term deposit, the investor must be aware that their money can only be withdrawn once the period has ended. If the investor notifies the account holder several days in advance, the account holder may in certain circumstances permit an early withdrawal. A penalty for early termination will also be applied.
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