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Not 1, 5, or 10! Soon, You Can Do FD for 20 Years – How It’s Different from Regular FD and Its Benefits

A major change is coming in the world of savings and investments. Currently, most banks allow fixed deposits (FDs) for a period ranging from 7 days to 10 years. However, some banks are now planning to extend this limit to 20 years.

This change will allow investors to save for a longer period and maximize their earnings through compound interest. According to a report by Hindu Business Line, Suryoday Small Finance Bank is preparing to introduce a 20-year FD scheme. Let’s understand how this scheme will work and what benefits investors can expect.

What Is This New FD Scheme?

At present, most banks offer FD options for a maximum of 10 years. Now, some banks are working on increasing this period to 20 years. According to the bank, the main objective of this initiative is to encourage long-term savings and help customers take advantage of compound interest.

Suryoday Small Finance Bank has planned to launch this scheme as a pilot project. This means it will be introduced on a limited scale initially, and based on customer feedback, it may be rolled out fully.

How Is the 20-Year FD Different from Regular FD?

The 20-year FD will have some key differences compared to traditional FDs:

  1. Longer Tenure – While regular FDs usually have a maximum tenure of 10 years, this scheme will allow customers to invest for up to 20 years.
  2. Systematic Withdrawal Facility – Investors will have the option to withdraw their funds gradually after 10 years, similar to annuity plans offered by life insurance companies.
  3. Higher Interest Rates – Longer-term FDs generally offer higher interest rates, providing better returns to investors.
  4. Regular Monthly Income Option – Customers can use this FD as a source of regular income after a certain period, helping them manage their finances efficiently.

Benefits of a 20-Year FD

1. Higher Interest Earnings

Since this FD will be for a longer period, it will offer higher interest rates. With the power of compound interest, investors can significantly grow their savings.

2. Regular Monthly Income

Investors will be able to withdraw funds systematically after 10 years, making this an ideal option for those looking for a steady income stream in the future.

3. Low-Risk Investment

FDs are considered one of the safest investment options since they are not affected by market fluctuations, ensuring capital protection.

4. Tax Benefits

FDs with a tenure of 5 years or more may be eligible for tax deductions under Section 80C. However, the exact tax benefits of a 20-year FD will depend on the bank’s policy.

5. Ideal for Retirement Planning

This scheme can be particularly beneficial for individuals planning their retirement. It ensures financial security by providing a steady income stream after retirement.

How to Invest in a 20-Year FD?

Once the scheme is fully launched, investors will be able to open a 20-year FD through both online and offline methods.

  • Online Method – Customers can use net banking or mobile banking apps to open and manage their FD.
  • Offline Method – Investors can visit their nearest bank branch to apply for this FD scheme.

Who Should Consider This FD?

  • Retirement Planners – Those who want financial security after retirement can benefit greatly from this scheme.
  • Low-Risk Investors – If you prefer safer investment options rather than volatile markets like stocks or mutual funds, this FD can be a great choice.
  • Long-Term Savers – If you're saving for your child's higher education, marriage, or other future expenses, this FD can help you build a substantial corpus.

How Is This Different from SBI’s Annuity Deposit Scheme?

Currently, the State Bank of India (SBI) offers an annuity deposit scheme for 3, 5, 7, and 10 years. Under this scheme, customers can deposit a lump sum amount and receive monthly annuity payments, including interest and a portion of the principal.

However, Suryoday Small Finance Bank’s 20-year FD scheme will be different:

  • Investors will need to deposit money regularly for the first 10-11 years.
  • After this period, they can withdraw funds gradually through a systematic withdrawal plan over the next 10-11 years.
  • This scheme combines elements of both investment and annuity plans, offering better interest rates and long-term financial security.

Conclusion

The 20-year FD scheme could be a great opportunity for investors, especially those who want long-term savings with good returns. It offers benefits such as higher interest rates, safe investment options, systematic withdrawals, and a steady income after retirement.

However, since this scheme is still in the testing phase, banks will finalize its terms and interest rates before a full launch. If this plan succeeds, it could become an excellent option for investors looking for financial stability.

Would you consider investing in a long-term FD? Share your thoughts in the comments!

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