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Thoughts On Fixed Deposits In Days:


One can easily observe that most of the banks have introduced special bucket deposits which measure the tenures in term of the days.Some of the representative deposits are as follows:

Name Deposit Period(Days) Rate Of Interest
IDBI 500 9.50%
Bank OfIndia 555 9.35
Bank OfIndia 1100 9.30
Bank OfBaroda 444 9.35

Almost all other banks comes with such special bucket deposits in between and closes when targets are achieved.

How these Deposit works:

Deposits in term of number of days are converted into number of months and number of days.Maturity value depends upon months and days for which deposits actually remain with the banks.

Conversion of the days into Months and days may differ from month to month..

For example we can consider two deposits with bank of india for deposit amount of Rs.40,000/-:

Deposit date Period Months/Days Maturity Value(Rs.)
20/04/2011 555 days 18M / 6D 46,292/-
20/08/2011 555 days 18M /5D 46,280/-

One can view that though period is same deposit made in month of August will receive less ¬†interest of one day…

I do not able to find a big catch,but what do you think for such deposits where quarters are kept incomplete intentionally…..

 


Category: Fixed Income

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