Investing our savings is a prudent choice because money kept idle is money kept wastefully. Fixed deposits (FD) are a popular investment choice, as they are considered safe due to their low-risk nature.
However, people do worry about whether investing in FDs is as safe as everyone makes it out to be. Read on to learn about how safe is it to invest in FDs.
Regulation by the RBI
If you invested your money with a bank, it is more than likely safe. This is because the Reserve Bank of India (RBI) has made deposit insurance compulsory for all banks. So, even if the bank you have an FD in goes insolvent, your money would be safe. Deposit insurance will cover your deposits up to Rs. 1 lakh. Due to this regulation, your money is safe whether your bank becomes insolvent, shuts down or merges with another bank.
While an NFBC or a company generally give better interest returns, it is important to check their security ratings before you invest, to mitigate the risk.
Fate of investments above Rs.1 lakh
Your FD investments above Rs.1 lakh in a single bank may not be entirely safe because the cap on deposit insurance is Rs.1 lakh. So, even if you have FDs in multiple branches of the same bank, all your deposits are totaled and capped at Rs. 1 lakh for insurance purpose.
However, there’s a way around this. You can invest and get cover for more than Rs.1 lakh on your FDs if you open them at different banks. In such cases, the deposit insurance applied for each bank will be separate.
Safest sector
In India, banks fall under different categories like private sector, public sector, co-operative banks and foreign banks. All these banks offer FDs, and all of them are covered by deposit insurance. Hence, whichever sector bank you opt for, your investment is equally secure.
Diversify your portfolio
It’s wise to diversify your investment portfolio, and an FD is an investment option that has been looked upon favorably for several generations. This is because of the stability and security FDs offer. With competitive interest rates of up to 8.40%, Bajaj Finserv FDs are a great option.
Additionally, FDs have several other benefits in addition to safety of investment and fixed returns. You can also avail loans against them during a financial emergency. In fact, Bajaj Finserv offers pre-approved loans on all loan products including loans against FDs. These offers are easy to avail and extremely convenient. All you have to do is provide some basic information, and you can get your pre-approved offer.
DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.
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