FTD Full Form in Banking is Fixed Term Deposit. It is a financial product offered by banks where individuals or businesses deposit a lump sum amount for a fixed tenure at a predetermined interest rate. Fixed Term Deposits are popular in India due to their guaranteed returns, safety, and simplicity.
Key Features of FTD:
- Fixed Tenure: The deposit remains locked for a duration chosen by the customer, usually between 7 days and 10 years.
- Fixed Interest Rate: The interest rate remains constant throughout the tenure, ensuring predictable returns.
- Premature Withdrawal: Allowed with a penalty, which reduces the interest earned.
Benefits of FTD:
- Capital Safety: FTDs are secure as they are not affected by market risks.
- Flexible Tenures: Depositors can select a tenure based on their financial goals.
- Periodic Payouts: Interest can be received periodically (monthly/quarterly) or upon maturity, catering to different income needs.
Tax Implications:
Interest earned from FTDs is taxable as per the depositor’s income tax slab. However, banks also offer tax-saving FTDs with a 5-year lock-in period, eligible for deductions under Section 80C of the Income Tax Act.
Why Choose FTDs:
Fixed Term Deposits are ideal for risk-averse investors looking for steady returns and financial security. They are commonly used for preserving wealth, building emergency funds, or achieving short- to medium-term financial goals.