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Fixed Deposit Receipt (FDR) – Meaning, Importance and Benefits

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Gaurav Seth
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Fixed Deposit Receipt (FDR)

Fixed Deposits are considered a secure investment option that guarantees consistent decent returns, no market risk, special interest rates for senior citizens, various interest payment options, and income tax benefits. Depositors can open an FD account with any financial institution, bank, or post office. Multiple FDs can also be initiated. Bank allows investors to invest in FDs both offline as well as online. After the successful opening of an FD, the bank provides an investment acknowledgment to the investors and this is called FDR i.r. Fixed Deposit Receipt.

FDR is a half-page document that the entity gives to the investor as proof of investment. It contains significant information and details like account detail, interest rate, investor details, etc. It also has information about the tenure, maturity amount, deposit type among others, details of nomination, auto-renew, withdrawal rules are also present. 

Its format is identical to that of an invoice or bill the shopkeeper gives the customer on purchase. Hence, investors should ask for an FDR from their bank.

Also Read : Canara Bank FD Interest Rates

IMPORTANCE OF FDR

The FDR acts as proof and acknowledgment of the ownership of the FD account by the specific investors. Along with this, the FDR contains every single detail pertaining to the account and this makes it a very important and significant document and must be in possession of the investor. 

CONTENTS OF FDR

As discussed above, FDR provides investors details regarding their FD account. These content are mention below:

  1. Name of the customer
  2. Age of the customer
  3. Bank account details of the customer
  4. Deposited amount
  5. Rate of interest
  6. Date of Maturity
  7. Interest that the depositor will get on maturity
  8. Scheme and Deposit related information

USE OF FDR

1. To avail a Loan against FD:

To address a financial crunch, investors can apply for a loan against their FD at lower interest rates than an unsecured loan. In pursuit of doing so, they are required to deposit this receipt as a lien for the term of the loan. Once the loan is fully repaid, FDR is returned to the investor with the updated details. 

2. For premature withdrawal;

In case the investor wishes to withdraw funds before the expiry of the tenure, they will be required to submit FDR as proof of ownership. 

3. For renewal:

In the case of an offline FD, the investor can be asked by the bank to surrender the FDR so that the existing FD account can be renewed for further tenure and a new receipt can be issued. 

FACTORS TO CHECK IN A FDR

1. Date of maturity and auto-renewal:

It is feasible for investors to opt for auto-renewal if they have regular cash flows every month as it saves on time and hassle during the renewal process. Along with this, the date of maturity should not be missed by investors as this will assist them to plan out their financials better and also with regard to the day they can withdraw their investment in FD.

2. Nomination:

The FDR should provide the needful details of the nomination in case the investor has made one. In the event of the unfortunate demise of the investor, the nominee will then receive the proceeds of the FD.

3. Interest rates and FD term:

This is the primary content of the receipt. An investor may know about these beforehand too but it is important to check whether it is there on the FDR. This has to be given priority especially in cases where investors are renewing their FD as certain interest rates may be discontinued by the bank.

4. Penalty on premature withdrawal:

Sometimes, banks charge a penalty on their FD if a pre-mature withdrawal has been done. The penalty rates vary across banks

5. Declaration to avoid TDS:

TDS is deducted by the bank in case of the interest income is more than Rs. 40,000 in a financial year. In case an investor’s income comes under the bracket of ‘no income tax’ then declaration through Form 15H or Form 15G can be submitted. This will need to be mentioned in the FDR.

Frequently Asked Questions (FAQs)

1. What is an FDR?

FDR is a half-page document that the entity gives to the investor as proof of investment. It contains significant information and details like account detail, rate, investor details, etc. 

2. How to receive a payment if the FDR is misplaced or lost?

Usually, the bank will ask for a written application or the investor can apply for a duplicate receipt of their FD. They may ask for certain documents for request processing.

3. What are some merits of FD?

Few merits of FD are:

  1. Flexible tenure
  2. Fixed interest rate
  3. Insurance of Rs. 5,00,000 by RBI’s subsidiary DICGA on FDs with commercial banks, if the bank defaults.
  4. Nomination and premature withdrawal facilities.

4. How can I get duplicate FDR?

The depositor will need to submit a written request application with an explanation of the situation. Banks may demand an indemnity bond for the same and some charges may also be levied. 

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