Fixed Deposit Interview Questions & Answers

  1. Question 1. To What Asset Class Does A Fd Belong?

    Answer :

    Fixed deposits form a part of the debt investment of an investor’s portfolio.

  2. Question 2. What Are Various Deposit Time Slabs Available?

    Answer :

    Deposit time slab is the period for which a term deposit can be made with a bank. There are various time periods for which this is possible like 14-29 days, 181-364 days, 3-5 years and so on. The depositor has to select one of these for the purpose of their deposit.

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  4. Question 3. Do Senior Citizens Get Any Extra Benefit On The Fd?

    Answer :

    Yes, they do get extra benefits in the form of higher interest rates.

  5. Question 4. In Case Of Company Fixed Deposits, Where Not To Invest?

    Answer :

    • Companies which offer interest higher than 15%.
    • Companies which are not paying regular dividends to the shareholder.
    • Companies whose Balance Sheet shows losses.
    • Companies which are below investment grade (A or under) rating.
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  7. Question 5. Will I Get A Fd Receipt?

    Answer :

    Yes, you will get FD receipt and please note that you will not be issued a receipt for FD opened through Internet Banking.

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  9. Question 6. What Are Tax-saving Fixed Deposits?

    Answer :

    Tax-saving fixed deposits are a special category of fixed deposits where the investor gets the benefit of a tax break when they invest a sum of money in the deposit. The maximum benefit is available up to an investment of Rs 1 lakh and there is a lock-in period of 5 years in the deposit.

  10. Question 7. What Is Maturity Of An Fd?

    Answer :

    Maturity is the time at which the amount in the fixed deposit has to be returned to the investor. The fixed deposit is given for a time period that is decided at the time of making the investment and at the expiry this has to be given back.

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  12. Question 8. What Are The Multiples In Which I Can Withdraw Money From My Fd?

    Answer :

    You can withdraw money from your FD in multiples of Rs 1,000/-. 

  13. Question 9. Are The Interest Rates For All The Banks The Same?

    Answer :

    Each bank or financial institution that is offering fixed deposits fixes its own deposit rates. The deposit rates depend upon the financial position of the bank and the conditions that impact the fundraising for the institution.

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  15. Question 10. What Is Compound Interest For Fds?

    Answer :

    Compound Interest is the ability of a fixed deposit in India to generate interest, which is then reinvested in order to generate further earnings is known as compound interest.

  16. Question 11. What Is A Deposit?

    Answer :

    Deposit is a sum of money lodged in a bank for the purpose of earning interest. A deposit is repayable according to terms of acceptance.

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  18. Question 12. What Is Future Value Of Any Fd?

    Answer :

    Future Value of any FD is the original amount plus the compound interest thereon, stated as of a specific future date.

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  20. Question 13. What Is Recurring Deposit Or Cumulative Deposit Account?

    Answer :

    Recurring Deposit or Cumulative Deposit Account – Under such bank account, a depositor is required to deposit (multiples of Rs 5/ or Rs 10/ are accepted in his account every month. This deposit is usually available from 1 to 5 years. The rate of interest charged by banks on such accounts depends on the period but is better than savings bank account because this account is like a Fixed Deposit Account. Banks introduce such deposit account to inculcate the habit of saving among people by offering.

  21. Question 14. Can I Get A Loan Against A Fixed Deposit?

    Answer :

    Yes, you can. Most banks offer a loan against FD. By using the fixed deposit as a collateral for the loan you can get a loan at lower rates. The rates are usually pegged at a few percentage points higher than the fixed deposit. Usually banks advance up to 90% of the fixed deposit being held in a loan.

  22. Question 15. Is There Any Scope Of Appreciation Of Principal In Case Of Company Fds?

    Answer :

    No, at the end of deposit period principal is returned to the deposit holder along with the applicable interest.

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  24. Question 16. What Is Repayment Of Fd?

    Answer :

    Repayment of Fixed Deposit is the action of giving the original amount that is invested back to the investor when the specified time period is over. The process of repayment will complete the entire fixed deposit cycle.

  25. Question 17. Upto What Limits Can A Company Accept Deposit?

    Answer :

    A Non-Banking Non-Finance Company(Manufacturing Company) can accept deposit subject to following limits:-

    Upto 10% of aggregate of paid-up share capital and free reserves if the deposits are from shareholders or guaranteed by directors.

    Otherwise upto 25% of aggregate of paid-up share capital and free reserves. 

    Non-Banking Finance Company can accept deposits upto following limits:-

    Equipment Leasing Company can accept four times of its net owned fund.

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  27. Question 18. What Happens To Accounts Of A Nri’s Nre Or Fcnr Accounts Which He/she Has Opened Abroad After His/her Return To India?

    Answer :

    A returning Indian’s NRE/FCNR accounts is usually designated as a Resident account. Most banks allow these deposits to continue to run till maturity at the contracted rate of interest.

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  29. Question 19. What Is Fcnr Deposit Account?

    Answer :

    FCNR deposits stands for Foreign Currency Non-Repatriable account deposits. This is a Fixed Deposit Foreign Currency account and not a savings account. Deposits in this account can be made in any of the major currencies like US Dollar, UK Pound, Canadian Dollar, Deutsche Mark, Japanese Yen and Euro.

  30. Question 20. How Are Interest Payments Made In Case Of Company Fds?

    Answer :

    Interest is paid on monthly/quarterly/half yearly/yearly or on maturity basis and is sent either through cheque or ECS facility.

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  32. Question 21. Do We Get Any Advantage Of Investing In A Non Callable Fd Instead Of A Regular Fd?

    Answer :

    As an investor the biggest reason why you should consider investing in non callable fixed deposits is the higher rate of interest. The rate of interest in non callable fixed deposits is higher compared to callable fixed deposits for the same tenure. But since Callable fixed deposits allow you to liquidate or break your deposit within the tenure period at any point of time choose your investments carefully.

  33. Question 22. What Are Demand Deposits In Fds?

    Answer :

    Demand deposits are the sum of money that is given to a bank but can be withdrawn as per the requirement of the depositor. Amounts that are lying in the savings and current accounts are known as demand deposits because they can be used at any point of time.

  34. Question 23. What Is The Range Of Tenure For Which I Can Open A Fd Account?

    Answer :

    You can deposit money for as short a period as 7 days and upto 10 years.

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  36. Question 24. What Is The Period Of The Company Deposit?

    Answer :

    Company Fixed Deposits can be accepted by a Manufacturing Company having duration from 6 months to 3 years. Non-Banking Finance Company can accept deposit from 1 year to 5 years period. A Housing Finance Company can accept deposit from 1 year to 7 years. 

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  38. Question 25. What Are Nomination Facilities Available On Fd?

    Answer :

    The facility of Nomination is available for relationships in the names of individuals. Unless otherwise specifically given in writing by depositors, nomination in deposit accounts will be at Customer ID level.

  39. Question 26. How Do I Redeem My Fd?

    Answer :

    After maturity of your FD, you can walk into any Bank across the country and claim your deposit by furnishing your Fixed Deposit receipt/Memorandum of Deposit.

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  41. Question 27. Why Interest From Company Fixed Deposit Is Higher Than Banks?

    Answer :

    Company Fixed Deposit have always offered interest which is 2-3% higher than Bank Deposit rate. Because they have to pay higher interest to banks for borrowing money.

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  43. Question 28. At What Frequency Will I Receive Interest On My Fd?

    Answer :

    For the Traditional scheme, the interest on the FD account is credited to the Savings account specified by you on a monthly basis or on a quarterly basis. For the Reinvestment scheme, the interest is compounded to the principal amount on a quarterly basis.

  44. Question 29. What Is Deposit Insurance For Fds?

    Answer :

    Explicit Deposit Insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank’s inability to pay its debts when due. Deposit insurance systems are one component of a financial system safety net that promotes financial stability.

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  46. Question 30. What Do You Mean By Bank Fixed Deposits?

    Answer :

    Bank fixed deposits are deposits that are collected from investors by banks for a specific time period are known as bank fixed deposits or bank term deposits. These form the main area of raising funds for banks. 

  47. Question 31. When Is Tds Deducted On The Interest From Company Fixed Deposits?

    Answer :

    TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.

  48. Question 32. Is There Any Auto Renewal Facility Available On Fd?

    Answer :

    Yes, you can opt for auto renewal at the time of opening the FD or anytime before the FD matures. Auto renewal allows your FD to get renewed automatically for the same period as the original deposit. However under auto renewal option the fixed deposit receipt is with the custody of the Bank and Memorandum of Deposit (MOD) is issued in lieu of fixed deposit receipt.

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  50. Question 33. What Is A Fixed Deposit?

    Answer :

    Fixed deposit is a sum of money given to a bank, financial institution or company whereby the receiving entity pays interest at a specified percentage for the time duration of the deposit. At the end of the time period of the deposit the amount that is originally given is returned to the investor. Fixed deposits are also known as term deposits. 

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  52. Question 34. Are Banks The Only Institution That Offers Fixed Deposit?

    Answer :

    There are many other institutions apart from banks that offer fixed deposit investment options for investors. Within the banking family there are public sector banks, private sector banks as well as co-operative banks with whom a fixed deposit can be made.

  53. Question 35. What Is Renewal Of Deposit For Fd?

    Answer :

    Renewal of deposit is a process whereby the deposit holder continues with the deposit for an additional time period after the completion of the initial time period of investment. The additional period can be similar or different from the original time period. Instead of withdrawing the deposit amount this is continued.

  54. Question 36. Does A High Interest Rate Offered On A Fixed Deposit Represent A Good Investment?

    Answer :

    The interest rate that is offered on a fixed deposit by the borrowing institution helps provide an insight into the position of the entity. If the financial condition is very strong then the institution can raise funds by offering a low rate while a high rate has to be offered to the investors to get them to consider the investment given the slightly higher risk involved. 

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  56. Question 37. Are Bank Fixed Deposits (fds) Safe?

    Answer :

    Bank Fixed Deposits (FDs) are generally safe investments because FDs up to Rs 1 lakh are insured under the Deposit Insurance & Credit Guarantee Scheme of India.

  57. Question 38. Is Tds Applicable On Fds?

    Answer :

    Tax is deducted at source, from the interest on Fixed Deposits, as applicable, as per the Income Tax Act, 1961.

  58. Question 39. Which Companies Can Accept Deposit?

    Answer :

    Companies registered under Companies Act 1956, such as:-

    • Manufacturing Companies.
    • Non-Banking Finance Companies.
    • Housing Finance Companies.
    • Financial Institutions.
    • Government Companies.
  59. Question 40. How To Choose A Good Company Deposit Scheme?

    Answer :

    • Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFC’s, RBI has made it mandatory to have an ‘A’ rating to be eligible to accept public deposits, one should go further and look at only AA or AAA schemes.
    • Within a given rating grade, choose the company with a better reputation.
    • Once you decide on a company, next choose the schemes that has given a better return. Unless you need income regularly.
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