Com­par­ing Bank De­posits and CFDs

Consumer Voice - - Bfsi -

Com­pany Fixed De­posits These de­posits are cat­e­gorised as ‘un­se­cured’ in the books of the com­pany – this means re­pay­ment of prin­ci­pal and in­ter­est is not guar­an­teed, and in case of any de­fault or de­lay, in­vestors have lit­tle re­course. In­vestors can­not sell the doc­u­ments to re­cover their cap­i­tal, thus mak­ing it a risky in­vest­ment op­tion. These de­posits are not cov­ered by de­posit in­surance as they are ex­empt un­der the rules. CFDs of­fer a bet­ter rate of re­turn (rang­ing from 7.80 per cent to 8.65 per cent per an­num. CFDs have a min­i­mum base amount for in­vest­ment be­low which none can in­vest in them. CFDs are re­newed with the prin­ci­pal amount of ma­tured de­posit only. A fresh ap­pli­ca­tion form needs to be submitted for ef­fect­ing re­newal on ma­tu­rity of the de­posit. Pre­ma­ture with­drawals can be made sub­ject to terms and con­di­tions of the com­pany. No loans are granted against CFDs. These are con­sid­ered to be ‘se­cured’ against the fixed as­sets of the bank; hence, even in the un­likely event of bank­ruptcy, the de­posits will rank as ‘high pri­or­ity’ in re­pay­ment. Bank de­posits of­fer a com­par­a­tively low re­turn, rang­ing from 7.75 per cent to 8.25 per cent. Bank de­posits can be in­vested for a min­i­mum of Rs 1,000 on­wards. Bank de­posits can be rein­vested with paid in­ter­est com­po­nent. Re­newals can be ef­fected on the FD open­ing form submitted ear­lier. Pre­ma­ture with­drawals can be made (ex­cept on tax shield de­posits) at any point of time dur­ing the cur­rency of the de­posit. Loans can be availed against bank de­posits till their ma­tu­rity, sub­ject to pay­ment of in­ter­est on the loans.

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