Fixed deposits remain a preferred choice for conservative investors who want capital safety, predictable returns, and simple paperwork. Bandhan Bank offers retail FDs with flexible tenures, cumulative and non cumulative payout options, online account opening, and DICGC insurance cover up to ₹5 lakh per depositor per bank. This guide explains how Bandhan Bank FDs work, how interest is actually calculated, what you need to open an FD, taxation rules, premature withdrawal terms, and a reality check on the claim of earning ₹88,000 in just 4 months.
How Bandhan Bank Fixed Deposits Work
A fixed deposit lets you invest a lump sum for a chosen tenure and earn a fixed rate for that entire period. With Bandhan Bank you can select:
- Cumulative FD where interest is compounded quarterly and paid at maturity
- Non cumulative FD with monthly or quarterly interest payouts to your savings account
Other features commonly offered include nomination, auto renewal at maturity if enabled, and online opening through internet or mobile banking for existing customers. Senior citizens may receive a higher rate on select tenures as per bank policy.
Short Summary
Field |
Details |
|---|---|
Product |
Bandhan Bank Fixed Deposit for individuals |
Safety |
DICGC cover up to ₹5 lakh per depositor per bank, subject to rules |
Interest calculation |
Compounded quarterly for cumulative FDs. Non cumulative options pay monthly or quarterly at a declared rate |
Indicative example |
At 6.5 percent per annum, ₹10,00,000 for 4 months earns about ₹21,700 before tax with quarterly compounding |
Tax treatment |
Interest is taxable as per slab. TDS applies under Income Tax Act rules. Forms 15G or 15H can be submitted if eligible |
Key actions |
Confirm latest FD rates, choose payout option, complete KYC, link bank account for maturity proceeds |
Official site link |
How FD Returns Are Calculated
Two approaches exist in practice:
- Cumulative FD uses quarterly compounding. Interest earned each quarter is added to the principal and earns interest in subsequent quarters.
- Non cumulative FD pays out interest monthly or quarterly. Since interest is paid out, compounding does not occur on those payouts.
For a short tenure such as 4 months on a cumulative FD, banks typically compute using quarterly compounding and prorate for the fractional period. The difference between simple interest and quarterly compounding over just 4 months is minor.
Reality Check: Can ₹10,00,000 Earn ₹88,000 In 4 Months
Use the math to verify claims before you invest.
- Illustration with a 6.5 percent per annum rate
Time equals 4 months which is one third of a year.
Simple interest approximation:
₹10,00,000 × 6.5 percent × 4 ÷ 12 ≈ ₹21,667
Quarterly compounding for 4 months improves this slightly to roughly ₹21,700. - What principal would you need to earn ₹88,000 at 6.5 percent in 4 months
Required principal ≈ ₹88,000 ÷ 0.065 ÷ 4 × 12 ≈ ₹40.62 lakh. - What annual rate would you need to earn ₹88,000 on ₹10,00,000 in 4 months
The implied rate is about 26 percent per annum, which is not a realistic bank FD rate.
The conclusion is straightforward. Earning ₹88,000 in 4 months requires either a much larger deposit or an unrealistically high interest rate for a bank FD. Use the example above as a method to sanity check any return claim.
Choosing Payout Options
- Cumulative option suits investors who do not need interim income and want slightly higher effective yield due to compounding.
- Monthly or quarterly payout option suits retirees or anyone creating a fixed income stream. The quoted payout rate may differ from the compounded annual yield. Compare the annualized return of each option before deciding.
Tenure, Minimum Amount, And Liquidity
Bandhan Bank offers multiple tenure buckets that typically start from as low as 7 days and go up to 10 years. Minimum deposit amounts are set by the bank and may vary by channel. Premature withdrawal is allowed, but banks generally levy a penalty on the applicable rate for the actual run period. If you think you may need cash before maturity, consider laddering your deposits across different maturities rather than locking the full amount in one FD.
Taxation And TDS
- Interest from bank FDs is fully taxable as Income from Other Sources at your slab rate.
- Banks deduct TDS under section 194A when interest paid or credited crosses the prescribed threshold in a financial year. If you are eligible, you may submit Form 15G or Form 15H to avoid TDS, but tax liability, if any, still needs to be assessed while filing your return.
- Senior citizens should also consider the deduction under section 80TTB for interest income up to the notified limit from banks.
Consult your tax advisor to plan interest payouts and declarations correctly.
Documents And Account Opening
To open a Bandhan Bank FD you typically need:
- Proof of identity and address as per KYC norms
- Recent photograph and PAN
- Savings account details for interest and maturity proceeds
Existing customers can open FDs online in a few clicks by selecting amount, tenure, payout type, and maturity instructions. New customers can visit a branch to complete KYC and open both a savings account and an FD.
Risks And Best Practices
- Rate risk is limited because the contracted FD rate is locked for the tenure, but you may face reinvestment risk at maturity if market rates fall.
- Liquidity risk arises if you need funds early. Keep an emergency buffer in a savings account or a short term FD.
- Documentation risk is low. Still, always download the FD advice or receipt, verify the name, tenure, interest rate, payout mode, and maturity date, and enable SMS or email alerts.
Worked Examples You Can Reuse
- Short term illustration
Deposit: ₹5,00,000
Rate: 7.0 percent per annum
Tenure: 4 months
Approx interest with quarterly compounding:
₹5,00,000 × 7.0 percent × 4 ÷ 12 ≈ ₹11,667 before tax. - One year cumulative illustration
Deposit: ₹3,00,000
Rate: 7.25 percent per annum
Interest at maturity with quarterly compounding is close to simple interest over one year since compounding frequency is quarterly, but the effective yield will be slightly higher than 7.25 percent due to compounding.
Always check the latest rate card on the official site before investing.
Official Site Link
For the latest FD interest rates, senior citizen add on rates, tenure options, and online opening steps, visit:
https://www.bandhanbank.com
Frequently Asked Questions
1. Is it possible to earn ₹88,000 in 4 months on ₹10,00,000 in a bank FD
No at typical FD rates. At 6.5 percent per annum a 4 month FD on ₹10,00,000 earns about ₹21,700 before tax. To earn ₹88,000 in 4 months you would need roughly ₹40.62 lakh at 6.5 percent or an unrealistically high bank FD rate near 26 percent per annum.
2. Does Bandhan Bank compound FD interest monthly or quarterly
Cumulative retail FDs generally use quarterly compounding. Non cumulative FDs can pay interest monthly or quarterly without compounding on the payouts.
3. Can I withdraw before maturity
Yes subject to premature withdrawal rules and a penalty on the applicable rate for the actual run period. The net return will be lower than the originally contracted maturity value.
4. How is FD interest taxed
Interest is taxable at your slab rate. TDS is deducted when interest crosses the threshold unless valid Form 15G or 15H is submitted and you are eligible. Senior citizens may claim relief under section 80TTB.
5. Are my deposits safe
Bank deposits are covered by DICGC insurance up to ₹5 lakh per depositor per bank for principal and interest combined. Keep your total balances per bank within this limit or diversify across banks to manage risk.
For More Information Click HERE
