What is Fixed Deposit |FD|- Nepalese Banking

         What is Fixed Deposit |FD|- Nepalese Banking

Definition:

Fixed deposit is investment instruments offered by banks and non-banking financial companies, where you can deposit money for a higher rate of interest than savings accounts.
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A fixed deposit, or ‘FD’, is a type of savings/investment account that promises the investor a fixed rate of interest. In return, the investor agrees not to withdraw or access their funds for a fixed period of time. (source-wiki)

A fixed deposit (FD) is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the agreed maturity date.

 It may or may not require the creation of a separate account.

It is known as a term deposit or time deposit in various country.

Types of FD ( Fixed Deposit):

• Standard Fixed Deposits
• Special Fixed Deposits
• Tax Saver Fixed Deposits
• Regular Income Fixed Deposits
• Flexi Fixed Deposits
• Short-term fixed deposits
• Long-term fixed deposits

Benefits of Fixed Deposit :

• Guaranteed returns
• Security
• Flexible in nature
• Higher rate of return
• Flexible interest rate pay-outs
• Returns on fixed deposit are assured, and there is no risk of loss of principal
• Safest investment instruments, and offer greater stability
• Customers can avail loans against FDs up to 80 to 90 percent of the value of deposits.
• The rate of interest on the loan could be 1 to 2 percent over the rate offered on the deposit.
• Low Risk

Calculation of FD ( Fixed Deposits ):
Formula:

        A = P x (1 + r/n)nt
                     I = A – P

Where,
A = Maturity Value 
P = Principal Amount 
r = Rate of Interest 
t = Number of Period 
n = Compounded Interest Frequency 
I = Interest Earned Amount