How to Check the Credibility of Banks Before Making Fixed Deposit Investments

How to Check the Credibility of Banks Before Making Fixed Deposit Investments

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Fixed Deposit (FD) is a type of investment instrument offered by banks and financial institutions that allows people to invest their money for a fixed period and earn a fixed interest rate. An FD is considered to be a low-risk investment option that provides investors with a guaranteed return, and it is one of the most popular investment options in India.

The benefits of investing in FD are many, and here are some of the most prominent ones:

Guaranteed Returns:

The primary benefit of investing in FD is the guaranteed return it offers. The interest rate on FDs is fixed for the entire tenure, and the investor can calculate their expected returns beforehand.

This makes it easier for investors to plan their finances and achieve their financial goals.

Low risk:

FDs are considered to be a low-risk investment option as the capital invested is not exposed to market risks. Unlike stock investments, which are highly volatile and can yield unpredictable returns, FD investment returns are stable and predictable.

Easy to implement:

One of the main benefits of FDs is the ease of implementation. Investing in FDs requires minimal documentation and can be done in a matter of minutes. One can invest in FDs online or by visiting a bank branch.

Flexible Tenure:

FDs offer flexible tenure options, ranging from a few days to several years. This allows investors to choose an investment period that best fits their financial goals. Investors can choose to reinvest the interest earned or withdraw it at maturity.

Tax Savings:

Investing in FDs can also offer tax savings for individuals. FDs with a five-year tenure or more are eligible for tax deductions under Section 80C of the Income Tax Act. The interest earned on an FD is also taxable as per the individual’s tax slab.

Loan Facility:

Many banks and financial institutions offer loans against FD, which makes it easier for investors to get credit at a lower interest rate. This makes FDs an ideal investment option for people who need to borrow money at low interest rates.

Investing your hard-earned money involves a lot of decision-making and analysis. It is not just about generating profits but also about securing your investments. In this regard, fixed deposits (FDs) have been one of the most preferred investment options for a long time as they offer assured returns and are risk-free. However, before placing your money in any bank’s FD, it is essential to check the credibility of the bank, as this will ensure the safety and security of your investment. Let’s look at how to check the credibility of banks before making fixed deposit investments and discover the Bajaj Finserv App, which can make the process easier.

Check the credit rating of the bank

 Credit rating is a crucial factor in determining the credibility of any financial institution. Bank’s credit ratings are given by independent rating agencies such as CRISIL, ICRA, and CARE. Credit ratings are based on various factors, such as the bank’s financial stability, asset quality, loan repayment capacity, and management quality. Banks with high credit ratings indicate that they are financially stable and have a good reputation.

 Banks with high credit ratings are considered safer for investing in fixed deposits. Therefore, it is always advisable to check the credit rating of the bank before investing in its FDs.

Look for the bank’s reputation

 The bank’s reputation is another critical factor in determining the credibility of the bank. A bank with a good reputation is generally considered safe and reliable. You can determine a bank’s reputation by checking its history, the services it offers, and the number of years it has been in operation.

 It is always advisable to invest your money in a bank with a good reputation. This is because such banks have already established themselves in the market, and their track record indicates that they have been consistent in providing reliable services. Doing business with reputable banks reduces the risk of losing your investments.

Check the bank’s financial stability

 Checking the financial stability of the bank is one of the essential steps while investing in FDs. A bank’s financial stability refers to its ability to meet its financial obligations. A bank with a high net worth and adequate capital adequacy ratio is considered financially stable.

 A stable bank can meet its financial obligations even during the worst of market conditions. Therefore, it is always advisable to check the bank’s financial stability before investing your money in its FDs.

Check the interest rates offered on FDs

 The interest rates offered on FDs are an essential factor while investing your money. Always look for banks that offer the best FD rates. Typically, banks offer a higher rate of interest on FDs with longer tenures. Therefore, choose an FD with a longer tenure if you are looking for higher returns.

 Investing in FDs that have higher interest rates can offer better returns on your investment. However, do not just blindly choose the highest interest rate. Ensure that you check the bank’s reputation and financial stability before making any investment decisions.

Check the bank’s deposit insurance

 The Deposit Insurance and Credit Guarantee Corporation (DICGC) of India provides insurance for deposits in all commercial banks, cooperative banks, and regional rural banks in India. Therefore, it is imperative to check whether the bank you are investing in, is registered with DICGC for deposit insurance.

 The deposit insurance offered guarantees the safety of your deposits in case the bank fails. Therefore, it is always advisable to invest in FDs with banks registered with DICGC.

Choose the right type of FD

 There are different types of FDs available in the market, such as traditional FDs, tax-saving FDs, and senior citizen FDs. Choose the right type of FD that meets your investment goals and requirements.

 Traditional FDs offer assured returns and have a fixed tenure. Tax-saving FDs offer tax benefits under section 80 C of the Income Tax Act. Senior citizen FDs are designed for individuals above the age of 60 and offer higher interest rates.

Bajaj Finserv app FD interest rate

With the advent of technology, many NBFCs have also introduced mobile applications to make investing and managing finances more convenient for their customers.

One of the most popular NBFC apps for Fixed Deposit (FD) is the Bajaj Finserv app. Bajaj Finserv offers a high rate of interest, up to 8.85% p.a. with a 5-year lock-in period. This app provides an easy and hassle-free way to invest in FDs, enabling investors to enjoy the benefits of high returns, safety, and liquidity.

Conclusion

 In conclusion, checking the credibility of banks before making fixed deposit investments is essential for securing your investments. Look for the bank’s credit rating, reputation, financial stability, interest rates, and deposit insurance, and choose the right type of FD that meets your investment goals.

Start your investment journey today with Bajaj Finserv App, a reliable and secure platform for investment decisions.

Finance