Question

You deposit ₹1,000 in a bank for one year at an interest rate of 5%. At the end of one year, you get ₹1,051 from the bank. However, you were allowed to withdraw this amount only at the end of the period you chose, which was one year.

Which of the following deposit schemes had you chosen?

• A. Current deposit
• B. Fixed deposit
• C. Recurring deposit
• D. Savings deposit

Answer 1

The correct option is B Fixed deposit

Under the fixed deposit scheme, a customer must deposit money for a fixed period and for a fixed interest rate.

For example, a customer deposits ₹1000 for one year at an interest rate of 5%. At the end of the year, the customer would get ₹ 1,000 (deposit amount) + ₹51 (interest rate) = ₹1,051. In a fixed deposit scheme, the customer can withdraw the money only after the fixed period or the maturity date. The maturity date is fixed before the customer deposits their money in the bank. Although the customer can withdraw the deposit money from the bank before the maturity date, they would not receive the interest money they are supposed to receive after the maturity date.