How Fixed Deposits of the Indian Middle-Class Help Boost Indian Economy?

In the Indian risk-conscious middle class, fixed deposits were still a favored investment source. The demographic segment of the investing population is split into two polar ends of the scale, one that is exceedingly averse to risk and another that is highly aggressive. So, fixed deposit deposits are a perfect choice for parking excess funds or investments. The returns and the principal sum come with security.

They are a perfect investing destination for someone who chooses stability over thrill. Of course, you do not have the guarantee of instant liquidity or a chance of higher profits in a bullish economy. Still, the option of earning money on idle quantities of capital are fixed deposits.

Because of this immunity from price ups and downs, the middle-income groups prefer fixed deposits. Individuals who earn enough to save a bit but are too worried about losing financial security are part of the customer base.


The RBI released the new bank deposit statistics. Right deposits or term deposits kept the lion’s share of deposits with banks continuously. The Fixed Deposits share was 63.5 % in 2008-09. Although the percentage has now declined to 57.7% according to the most recent information, the majority of deposits with banks are still the biggest. This is a tribute to Indians’ preference for fixed deposits as savings instruments.

Financially Inclusive

Fixed deposit accounts provide a mechanism for investment that guarantees:

  • Predictable or fixed returns are promised along with the protection of the principal sum.
  • Park investments without thinking about the uncertainty or the scope of the return.

Also, bank FDs provide you with the opportunity to determine whether to collect the interest on maturity or regularly. In the preceding example, FD interest in a cumulative FD pays quarterly. The interest is paid periodically in the latter case so that you can direct it to your everyday expenses. FDs are a perfect method for mobilizing undesirable assets or making savings in the economy. Any investor who is highly aware of risks or also cautious is prepared to turn funds into FDs and thereby introduce them into the banking cycle to encourage financial inclusion.

Driving the force

People are most likely to have excess assets as net income grows. The next logical move is to find means to invest the extra funds. The dual priorities of safety and returns in any investment avenue should be preferably established. These functions are supported conveniently by FDs. Most individuals became first-instance investors by engaging in a fixed deposit. No one is willing to risk their hard-earned money in a business game.

The effects of taxability also continue to make FDs profitable. For example, this year, the government has a softer tax array. As an individual taxpayer who has an annual revenue less than ? 5 Lakhs, the budget has declared that no tax must be charged. Again this means a higher surplus income on your side, meaning that savings can be more encouraged. Fixed deposits, as already discussed, will be the first option for people investing for the first time.

As a result, as more funds are pumped into the banks, their credit potential increases. This implies that the business sector lends further to grow and build. It means employment and more money in the economy as firms succeed.

Assured High Returns?

The Union budget shows that the government understands our precarious economic condition. To encourage investments in the region, the tax did not apply to annual income under? five lakhs. With higher disposable income, people are driving their funds and are more inclined to invest in fixed deposits to narrow the right assets. More significant investments would lead to more money being lent to others – boosting the corporate market and enabling firms to distribute it.


While fixed deposits are not for liquidity purposes, they have a variety of advantages. If needs emerge, issuers will give you a loan on your Fixed Deposit. Invest in your targets and liquidity requirements for a duration of 12 to 60 months. FDs have a high safety net capital characteristic which makes the investment even more common. Investors can select the one that suits the requirements from the different investment choices available. So, they can be a significant driver in mobilizing savings by fixed deposits. You can use tips available on our website to maximize your returns on the fixed deposits and also compare different FD interest rates offered by the banks and NBFCs.