There are mainly three types of fixed deposits available in the market, namely: a) Fixed deposits offered by Banks b) Fixed deposits offered by Post Offices and c) Company fixed deposits a) Fixed deposits offered by Banks: Considered as the safest of all options, banks have been the roots of the financial systems in India. Promoted as a means of social development, banks have played an important role in not only urban areas, but also in rural fulfillment. For an ordinary person, banks have acted as the safest avenue wherein a person deposits money and earns interest on it .
Two main modes of investment in banks, savings accounts and fixed deposits have been effectively used by all. B) Fixed deposits offered by Post Offices: Just like banks, post offices in India have a very wide network. Spread across the nation, they offer financial assistance and also serve the basic requirements of communication. Amongst all saving options, Post office schemes have been offering the highest rates. Furthermore it is the fact that the investments are very safe with the department being a Government of India entity.
Hence the two basic and most sought features of safety of return and quantum of returns were being carefully taken care of. Certainly current market position is not the most efficient system in terms of service standards and liquidity out tense nave still manage to attract ten attention AT small retail I Investors. However with the government investing in with its intention of reducing the interest tastes in small savings options, this avenue is expected to lose some of the investors.
Public Provident Funds act as options to save for the post retirement period and have been considered as a good option due to the fact that returns were higher than most other options and also helped the people gain from tax benefits under different sections. C) Company fixed deposits: Another often used route to invest has been the fixed deposit schemes which are floated by companies. Companies have used the fixed deposit schemes as a means of monopolizing funds for their options and have paid interest on them. The safer a company is rated, the lesser the return offered has been the rule.