If you are looking for lucrative investment opportunities in fixed deposit, then we think a Flexi Fixed Deposit would be it. Combining the best features of different fixed, current and savings accounts, the Flexi Fixed Deposit, with easy liquidity options and profiting returns, proves to be the most benefitting investment option for investors.
In this article, let’s check out in detail how a Flexi Fixed Deposit works, its features and the top banks in India offering it.
What is a Flexi Fixed Deposit?
A Flexi Fixed Deposit is a one-of-a-kind fixed deposit product offered by banks all over the world. This financial product comprises both a demand deposit and a fixed deposit. This means that when you choose to go for a Flexi Fixed Deposit, you get both the liquidity of current and saving accounts along with the returns of a fixed deposit.
All Flexi Fixed Deposit schemes combine the benefits of all three accounts, i.e., current account, savings account, and fixed deposits. This feature is known as the auto sweep feature. Under this feature, the extra balance of any specified amount is easily transferred to a fixed deposit account automatically for a predefined term of one year.
Difference Between Regular FD And Flexi FD
Here are 5 major differences between the two investment schemes:-
|
Parameters |
Flexi Fixed Deposit |
Regular Fixed Deposit |
| Objective | In the case of a Flexi Fixed Deposit, the investor is free to choose investment duration ranging from 1 month to 15 months. In a Flexi Fixed Deposit scheme you need to deposit a small amount on a short-term basis. | In a fixed deposits scheme, the money is saved for a longer duration ranging from 3 years to 20 years, on the basis of a predefined term. In a fixed deposit, you are required to deposit a larger amount for a long tenure. |
| Tenure | In the case of a Flexi Fixed Deposit scheme, the tenure ranges from 7 days to a maximum of 2 years. Flexi deposit schemes offer freedom in choosing tenures. | The tenure for a regular fixed deposit ranges from 5 years to 20 years. No choice is given when it comes to tenure. |
| Tax Benefits | There are no such tax benefits associated with Flexi Fixed Deposit schemes. | Under Section 80C of the Income Tax Act, there are a number of tax benefits for fixed deposits of over 5 years. |
| Difference Between Interest Rates | Flexi Fixed Deposit schemes have a lower rate of return because of their generally lower investment tenure. | Longer or regular fixed deposits schemes offer a higher rate of interest than Flexi Fixed Deposit schemes. |
| Fund Withdrawal Facility | Investors enjoy an increased liquidity benefit when they invest in a Flexi Fixed Deposit scheme. The money can be withdrawn anytime and be credited into the bank account within 24 hours. | In the case of a regular deposit, the investor cannot withdraw the deposit amount before the end of tenure. |
How Does a Flexi Fixed Deposit Work?
In a Flexi Fixed Deposit scheme, the investor manually credits the money to their deposit account. The investor opting for this investment product enjoys the combined benefit of liquidity of a savings account along with a higher rate of return of a fixed deposit.
As previously mentioned, in a Flexi Fixed Deposit scheme, the investor has to manually deposit the amount for a tenure of his choice. In this scheme, any amount over the threshold gets transferred into a fixed deposit account. Further, the amount is automatically swept out without incurring any penalty.
Banks in India Offering Flexi Fixed Deposit Scheme
Numerous banks in India have a Flexi Fixed Deposit scheme for their customers. These banks provide a competitive interest rate for their products. One of the most prominent banks in India offering this facility is the Union Bank of India (UBI).
All the Flexi Fixed Deposit options offered by these banks come with the benefits of both a savings account and a fixed deposit. Some of the banks that offer this feature in India are as follows.
Allahabad Bank
The Flexi Fixed Deposit product offered by Allahabad Bank is called the Flexi Fix Deposit scheme. The product aims to maximize interest for its investors to ensure greater returns. This investment scheme even comes with the option to liquefy the funds. The minimum amount required to open a Flexi Fixed Deposit account with Allahabad Bank is ₹25,000.
State Bank of India (SBI)
Any interested investor can open a Flexi Fixed Deposit account with the State Bank of India with a minimum investment amount of ₹5,000. The minimum tenure for this investment option is 5 years. SBI also offers its investors the option of customizing the deposit amount via flexible instalment plans.
ICICI Bank
The Flexi Fixed Deposit scheme of ICICI bank is offered by combining the features of a savings/current account with a Flexi deposit. Minimum savings account balance of ₹10,000 and a minimum current account balance of ₹20,000 is required to open the account. The tenure for this investment product ranges from 15 to 91 days.
Axis Bank
The Flexi Fixed Deposit product offered by Axis Bank is called the ‘Encash 24 Flexi Deposit’. This product offers the liquidity of a savings account along with interest accrued from a fixed deposit. The tenure for this investment product ranges between 6 months and 5 years.
Bank of India
The ‘Star Flexi Recurring Deposit Scheme’ of the Bank of India provides its customers the flexibility to choose between an individual and joint account. The tenure for this product ranges from 12 months to 10 years.
Features and Benefits of a Flexi Fixed Deposit
The following are some of the features of a Flexi Fixed Deposit:-
- Flexible Tenure: Flexi Fixed Deposits are savvy investment options that are designed to offer the investor the freedom to choose their own tenure. The investor can choose the duration (long or short term) as per their needs.
- Competitive Rate of Interest: Flexi Fixed Deposits can provide a higher rate of returns than oyster fixed deposit schemes enabling the investor to build a much larger corpus.
- Flexible Investment Amount: Under the Flexi Fixed Deposit scheme, the investor is required to pay a lump sum investment amount upfront. The investor has the freedom to choose the amount at their discretion. Different banks offering this scheme have different deposit criteria. So, make sure you go through and understand all the requirements before opening a Flexi Fixed Deposit.
- Simple Withdrawal Process: One of the major benefits of the Flexi deposit scheme is that it provides increased liquidity to investors by offering a premature withdrawal feature. This benefit varies from bank to bank according to their investment terms and conditions. It is always a good idea to carefully read all the terms before you make a decision.
- Easy Investment Process: It is fairly easy to open a Flexi Fixed Deposit account in any bank. The process is very transparent. All you need to do is fill a form providing some basic details like the investment amount, tenure, contact details, address, etc.
- Loan Against Investment: Individuals who have invested in a Flexi deposit scheme can avail of a loan from the bank. The bank considers the investment scheme as collateral against the loan provided to the investor. Reading the policies of the bank regarding the loan is the best practice before enjoying this benefit.
- Auto-Renewal Feature: If you like to invest in multiple financial products, you know how complicated it can get. It is fairly tedious to keep track of all the maturity dates and investment amounts. Sometimes it can even lead to missing the renewal dates. This is something you don’t need to worry about when you go with a Flexi Fixed Deposit scheme. Banks offer an auto-renewal option to people investing in this financial tool. The bank will automatically renew the deposit amount of the scheme on the date of maturity.
Eligibility to Open Flexi Fixed Deposit Scheme
The eligibility criteria for opening a Flexi fixed deposit varies according to the service provider. Different banks have different eligibility requirements for this product. Given below are some of the service providers along with the eligibility criteria:-
- State Bank of India: To open a flexi fixed deposit scheme with State Bank of India, you need a minimum balance of Rs. 5000 in your savings/current account
- Axis Bank: If you wish to open a Flexi Fixed Deposit with Axis bank, you just need to have a minimum balance of Rs 100 in your savings account. If you are a current account holder with Axis bank, you should have a minimum balance of at least Rs 20,000 in your account
- ICICI Bank: In order to open a Flexi FD scheme with ICICI Bank, you need to maintain a minimum balance of Rs 10,000 in your savings or current account
- Bank of Baroda: You can opt for BOB flexi FD scheme by maintaining a minimum balance of Rs 5000 in your savings account.
Flexi FD Interest Rates
The following are some of the banks that offer flexi deposit schemes, along with the corresponding interest rates:-
| Name of Bank | Tenure | Interest Rate |
| State Bank of India | 5 to 7 years | 6.75% |
| Axis Bank | 6 months to 5 years | 4.40 % to 5.40% |
| ICICI Bank | 15 days to 91 days | 2.5% to 3.25% |
What is the Interest for a Fixed Deposit of 1 Lakh?
The structure for fixed deposits in India has been created in such a way that you can get lucrative returns and achieve your financial goals faster. The interest rate applicable for a fixed deposit of Rs 1 lakh will depend upon the tenure of your investment. The longer the tenure, the higher the rate of interest. The following table shows the interest accrued on an investment of Rs 1 lakh for tenure ranging up to 5 years:-
|
Tenure |
Interest Rate Applied | Monthly Interest |
Total Interest Earned |
|
1 Year |
5.51% | ₹459 | ₹5,510 |
|
2 Years |
5.94% | ₹459 |
₹11,880 |
|
3 Years |
6.31% | ₹526 | ₹18,930 |
| 4 Years | 6.31% | ₹526 |
₹25,240 |
| 5 Years | 6.31% | ₹526 |
₹31,550 |
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