In order to know if this unique investment product is an ideal choice for you or not, here is a look at its key features.
Eligibility Criterion: Individuals either singly or jointly, a legal guardian on behalf of a minor, companies, trusts and HUFs are eligible to invest in the scheme.
Minimum amount of investment: To invest in the scheme, you need to park a minimum sum of Rs. 1Lac and in multiples of Rs. 10,000 thereafter. The scheme however has upper cap with respect to the maximum investment.
Maturity term: IOB offers fixed deposits with floating rate of interest for a maturity term between 3 years and 10 years. So, in case you have a longer investment horizon then you can surely park your money into such scheme subject to other factors. However, do remember floating rate term deposits have a fixed lock-in and the investment cannot be liquidated before the completion of the lock-in period. So, before investing keep this aspect in mind.
Interest rate : IOB floating rate fixed deposits offer interest rates that are determined on the basis of daily average of 5-year G-securities rate of the last 6 months for FDs with maturity term between 3 years and 5 years. For FDs with a maturity time frame over 5years-10 years, the interest rate depends on the daily average of 10-year G-securities rate of last six months.
The rate on such fixed deposit scheme is changed half-yearly on 1st March and 1st September. And the interest is payable quarterly in the month of January, April, June and September on the 1st working day.
Premature closure : Premature closure of the fixed deposit scheme is allowed only after the completion of the lock-in period. Further, a 10-day prior notice for closure has to be provided to the bank. The foreclosure penalty at the rate of 1% will be deducted in case of premature closure of the scheme and the applicable rate of interest shall remain payable.
Loan provision: Loan on such a FD scheme is provided like other regular FDs to the maximum value of 90% of the deposit amount. Interest on the loan will be charged @ differential rate of interest of 2% and 3% higher than the floating rate of interest in case of self and third party respectively.
Information courtesy: IOB Website