BANKING INVESTMENT

Bank Deposit: The bank deposit have been a very attractive from if investment. The deposit enjoy a very good liquidity, yes your bankers can not say no for premature encashment of term deposit at any points of time (as per provision of Baking Regulation Act, 1949) it is free of middlemen and very easy to open and operate. After LPG the rate of interest are on roller coaster and the rates fluctuate between 9 to 10% Generally invest for lowest period of highest rate of interest. Your bank would be offering highest rate for a 2 to 3 years maturity. Be watchful of further announcement of revision of rats of interest. In case of lowering of rates your deposit is protected till maturity for the rate contracted but incase of increase in rates you can take advantage of new rates with premature encasement of present deposit without penalty. Remember that for the period elapsed bank would pay you the existing rate for the period has elapsed (with penalty) and not the contracted rate. Hence, do the revised calculation of benefit and tack the decision. While investing in smaller / co-operative banks remember that DICGC-Deposit Insurance and Credit Guarantee Corporation cover for you're your deposit is only up to Rs 1 lakh per person (for bank as a whole) in case of failure of bank. Please not following points relating to bank deposits.

Saving Deposit: Now bank are free to offer any rate to SB A/c. holders (earlier the rate was uniform for all the banks at 4%). Now the banks are likely to rates the rates upto 6%, may be some banks will differentiate on the basis of average balance/transactionetc.
Quarterly Compounding: The interest payable is always with quarterly compounding. Hence, if you opt of monthly interest plan then discounted interest will be paid. For example if Rs 1 lakh is invested is monthly income plan at 12% then the monthly interest is Rs 1000, but bank will pay you Rs 983. Hence, unless required that badly do not opt for monthly plains instead select quarterly interest payout which will give you full amount of interest. (For loans given by banks the compounding is done at monthly interval).
Payment Before Maturity: Generally bank's charge 1% penalty over the interest payable to you (lower of contracted rate of rate applicable to the period deposit has remained with bank). Before opting such payment, compare the loss from option of availing upto 90% loan against deposit at 2% higher rate.
Reinvestment/Cumulative Plans: Bank offer than if you opt for such plans the interest will be quarterly compound at the contract rate and on maturity entire amount paid. The persons having regular source of income and not dependent on bank interest must opt for such plans. Do remember to include such deposit's interest income each year taxable income.
TDS: Bank will deduct TDS at the rate 10% if your interest income from a branch of the bank exceed Rs 10000. If you do not furnish PAN number then deduction will be At 20% of the interest amount. In case of income is not taxable than fill from 15 H/G well in time and obtain acknowledgement thereof. In case you have forgotten to fill such form and tax is deducted than you will have to fill a return to get that amount refund.
Bank Deposit under 80C: request bank to accept the deposit in such specific scheme. Only scheduled bank are authorized to accept such deposit and lock in period is minimum 5 years.
Maximum Period of Deposit: bank accept deposit only for the period of maximum ten years.
Recurring Deposits: Generally these deposit are having same rates of interest as applicable to fixed deposit.
Standing Instruction: you can give standing instruction to your bank for crediting interest for deposit to your account or for deducting recurring deposit installment or even payment of loan installment. Generally there will not be any charges for following such instruction. This will avoid unnecessary delays & payment of penalty charges.