Bonds & Fixed Deposits

A safe way to grow your money

A Fixed Deposit will deposit a certain amount of money with a financial institution for a fixed term at a predetermined rate. You are given the option of receiving interest income on a monthly, quarterly, biannually and annually, at interest rates higher than banks.

Why opt for Fixed Deposits?

  • If your risk appetite is low, fixed deposits are perfect for you. Since most of the instruments are rated, fixed deposits have a very high safety level.
  • Attractive returns at interest rates higher than banks.
  • You get a stable and fixed source of income
  • Interest rates are even higher for senior citizens.
  • High liquidity; most of these issuers offer 75% of the investment amount as loan @ 2% over the interest rate on the deposit, as well as a pre-maturwithdrawal.
  • You have the potential to earn compounding interest on your money by reinvesting the principal amount along with the interest earned.
  • Flexible tenure there are various tenures ranging from 1 to 7 years
  • You can receive interest frequently; most issuers will offer monthly, quarterly, bi annual and annual cumulative deposits.
  • The operational process is extremely simple; there is no PAN requirement with fixed deposits.
  • You get direct ECS credit facility for interest payments or advance interest warrants for the year issued by most companies
  • No TDS for interest payments upto Rs. 5000/- per financial year.


Bond refers to a security issued by a company, financial institution or government which offers regular or fixed payment of interest in return on the amount borrowed money for a certain period of time.

Thus by purchasing a bond, investor loans money for a fixed period of time at a predetermined interest rate. While the interest is paid to the bond holder at regular intervals, the principal amount is repaid at a later date, known as the maturity date. While both bonds and stocks are securities, the principle difference between the two is that bond holders are lenders, while stockholders are the owners of the organization. Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely.

Customer also has the option of recurring interest along with Principal i.e Cumulative Interest. Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender (creditor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bonds must be repaid at fixed intervals over a period of time.

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