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Double Scheme Fixed Deposit

Updated on: 20 Dec 2023 | 8 min read

Building wealth can be an exciting journey with various avenues to explore, and one of the simplest and most rewarding paths is to keep your money at work for you. The magic of compounding works wonders to create more money from your investments. Simply said, the longer you hold your investment, the better your return and growth.

 

Bank Fixed Deposits (FDs) are the most trusted financial instruments since the money is safe with banks and they are well regulated by the RBI and the government. But traditional fixed deposits offer a fixed interest rate depending on the tenure you choose. The interest is payable as per your choice, either monthly, quarterly, semiannually, annually or on maturity.

 

To take the benefits of a traditional FD a notch higher, banks offer an FD double scheme. As the name suggests, the FD double scheme doubles the principal amount. The term of the deposit is fixed, and the money stays invested for the entire period, along with interest. In this article, let us learn more about its features and eligibility.

What is a Fixed Deposit Double Scheme?

A fixed deposit double scheme is a type of fixed deposit where the tenure of the deposit and interest rate are fixed. You need to invest the principal for a fixed time. The money earns a specified interest rate, and the investment amount doubles at maturity.

It is important to note that, in this scheme, the investor does not have the flexibility to choose the deposit tenure. The bank specifies a fixed term and interest rate for the deposit.

Usually, banks require a minimum deposit amount for the scheme. The interest rate ranges between 3% – 7.5% and varies as per the term of the scheme. A unique feature of these schemes is that interest generally compounds quarterly, thus enhancing the overall yield. There is no separate interest payout; the principal and interest stay locked in till maturity, and finally, you receive double the investment amount (including the interest).

Features of the FD Double Scheme

Features of the FD Double Scheme are:

  • Interest Rate: FD double schemes offer attractive interest rates. You receive double the amount you invested on maturity; the rate does not change once a deposit is created. It ensures that any fluctuation in interest rates does not impact your investment.
  • Safe Returns: Since banks offer FDs under the RBI’s purview, you have complete safety and peace of mind. There is no market-linked volatility involved in fixed deposit products. The return is assured with no variation, ideal for risk-averse investors. Moreover, DICGC (Deposit Insurance and Credit Guarantee Corporation) also provides insurance coverage worth up to Rs. 5 lakhs on the deposited amount to safeguard the depositor's money further.
  • Hassle-free Process: FD double schemes offer a ready-made investment solution for investors who need help choosing between multitudes of investment options. Opening the deposit is simple; you can visit the bank and submit the application form. You can deposit online with some banks if you already have a bank account. If you do not have an account with the bank, you can carry your original KYC documents, and the account can be set up easily.
  • Premature Withdrawal: Since FD double schemes are designed to double your investment, banks usually do not allow early withdrawal. A few banks may allow partial withdrawals, but only with a penalty. You must check the norms with the bank when opening the deposit.
  • Loan Against Deposit: Even though premature withdrawal is not allowed, you can take a loan against the FD for any fund requirements under this scheme. This ensures that your investment is not disturbed if you need emergency funds.
  • Deposit Amount: You can choose the deposit amount for the FD double scheme. The minimum fund requirement is low, which makes investing easy even if you do not have a large upfront amount to deposit.
  • Multiple Deposits: You can create multiple deposits as and when you have funds available. There is no restriction on the number of deposits you can make.
  • Nomination Facility: Banks offer a nomination facility so your family can easily access the money in case of any emergency.
  • Taxation: The interest income from the FD double scheme is treated as “income from other sources” for tax purposes. There is no tax benefit on these deposits. Banks deduct a 10% TDS in interest if the interest amount exceeds Rs 40,000 in a financial year. For senior citizens, this limit is relaxed to Rs 50,000. The TDS rate is 20% if the PAN card is not submitted to the bank.

What Is the Difference Between a Normal Fixed Deposit and a Fixed Deposit Double Scheme?

The following are the differences between the normal FD and the FD double scheme:

Basis of DifferenceNormal FDFD Double Scheme
TenureThe investor can select the deposit tenure, and the interest rate applied is as per the tenure. The shorter the term, the lower the interest rate and vice-versa.The bank fixes the tenure and interest rate for the money to double. The purpose of the FD double scheme is to allow your money to remain invested for a long time to earn higher interest and give you superior returns.
CompoundingThe investor has different interest payout options on regular FDs. You can receive the interest payout monthly, quarterly, semi-annually, or annually for non-cumulative deposits. For a cumulative deposit, interest is compounded quarterly/ half-yearly /annually or paid out with the principal on maturity.An FD double scheme is a cumulative interest deposit scheme; it does not have an interest payout option. The interest is generally compounded quarterly and paid as a lump sum along with the principal on maturity.
Premature withdrawalNormal FDs allow premature withdrawal with penalties.Only a few banks would allow a premature withdrawal of FD double schemes.

Eligibility Criteria for the FD Double Scheme

The following are the eligibility criteria for the scheme:

  • Individuals can open an FD double scheme in single or joint names.
  • You can open a deposit in the name of a minor.
  • Companies, partnership firms, institutions, and non-individual entities can open the deposit.
  • Senior citizens can also invest in the scheme.

List of Banks Offering Fixed Deposit Double Scheme

Various banks offer the FD Deposit Scheme for a tenure ranging from 5 to 10 years. Following is the list of banks providing the Fixed Deposit Double Scheme:

  • State Bank of India (SBI)
  • ICICI Bank
  • HDFC Bank
  • Axis Bank
  • Canara Bank
  • Punjab National Bank (PNB)
  • Union Bank of India
  • Bank of Baroda
  • Allahabad Bank
  • Tamil Nadu Mercantile Bank
  • Central Bank of India
  • Indian Bank

Final Thoughts

Fixed deposit double scheme for risk-averse investors; if you have a pool of money that you want to keep aside for a specific goal like education, wedding, etc., you can safely invest in a FD double scheme for safe and assured returns. The invested money is doubled without any volatility. There is no need to worry about money since bank deposits are one of the safest investments.

FAQs

Is the fixed deposit double scheme a safe investment?

Yes, the fixed deposit double scheme is offered by the banks. The interest rate and tenure are fixed, and you receive double the principal amount on maturity. The return is fixed and assured.

How does money double in a fixed deposit scheme?

The tenure of an FD double scheme is fixed and does not vary. Since the term is fixed, money remains invested for the entire period. The interest is reinvested and compounded quarterly. These factors ensure your money doubles at the end of the term.

Is a loan available against the fixed deposit double scheme?

Yes, you can avail a loan against the FD double scheme.

Will TDS be applicable on the fixed deposit double scheme?

Yes, there is a TDS deduction on interest earned on the FD double scheme. The TDS rate is 10% if the interest amount exceeds Rs 40,000 in a financial year. For senior citizens, this limit is Rs 50,000. The TDS applied is 20% when no PAN card is furnished to the bank.

Can I invest my child’s name in the FD double scheme?

Yes, you can invest in a minor’s name in the FD double scheme.

Will my deposit double in five years?

The time for doubling the principal depends on the scheme’s tenure and the interest rate. Since the rates change from time to time, the banks assign the terms accordingly on FD double products. You can check the current terms for the FD double scheme with the specific bank.

Is the interest the same for everyone in the FD Double Scheme?

No, the interest rates for the fixed deposit double scheme differ for different sets of customers. Senior citizens and members of the armed forces earn more interest than the general public.

Is the auto-renewal facility available for the FD Double Deposit Scheme?

Yes, banks offer the facility of auto-renewal for the FD Double Deposit Scheme.

How long is the maturity period for an FD Double Scheme?

The maturity period for an FD Double Scheme differs depending on the terms and conditions of the scheme. It usually ranges from 3 to 10 years.

What documents do I need to submit to open a Fixed Deposit Double Scheme?

You need to submit a few documents, including valid identity proof, address proof, and PAN card, to open a Fixed Deposit Double Scheme. The list of required documents may vary based on the bank or financial institution's policies.

What is the minimum deposit amount required for a Fixed Deposit Double Scheme?

The minimum deposit amount required for opening a Fixed Deposit Double Scheme differs depending on the bank or financial institution offering the scheme. Usually, the minimum deposit amount starts at Rs. 100 - 1000.

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