The minimum deposit required in a TD account is Rs 1000. There is no maximum deposit limit. Any sum in multiples of Rs 100 can be deposited in the TD account.
Time Deposit Scheme Interest calculation
The current interest rates (per annum) offered on the four categories of time deposit accounts are:
- 1 year – 6.9%
- 2 year – 6.9%
- 3 year – 6.9%
- 5 year – 7.7%
Key conditions of Time Deposit Scheme: The interest rates offered on deposits in these four accounts are compounded quarterly and paid at the end of the year from the date of opening of the account.
An account holder can get the interest income credited to his/her savings bank account. In case the depositor doesn’t withdraw the annual interest earned on his deposited amount, it won’t earn any additional interest, according to the scheme.
Given the conditions mentioned above, here’s a look at the yearly interest Rs 1 lakh deposit in schemes of 1, 2, 3, and 5 years earn respectively (as per the current interest rate).
From the above chart, it can be inferred that a deposit of Rs 1 lakh in a 5-year account will earn a total of around Rs 7925×5 = 39,625 in five years as interest. You can withdraw the interest earned every year and reinvest in other schemes.
Premature withdrawal: If a 5-year Time Deposit account is closed after four years from the date of deposit, the rate admissible for a three-year Time Deposit account will be applicable for calculation of interest. Also, any interest already paid on the deposit will be recovered from the amount of repayment of deposit and the interest payable.
The TD account can be pledged or transferred as security, on an application made by the depositor in Form-5 supported with an acceptance letter from the pledgee.
