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Why Do Indian Investors Prefer Bank FDs?

In this blog, we’ll address the elephant in the room - why are bank fixed deposits so popular among Indian investors? Read all about the history and benefits of FDs to get the answer.
November 8, 2024
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If you’re an Indian investor, you’d know that the words “safe” and “predictable” are synonymous with one of India’s favourite investment options, the traditional bank fixed deposit. 

But is a fixed deposit enough for your wealth to actually grow over time, beat inflation, and help you achieve financial freedom? Sadly, no! 

That can only happen if the asset outperforms inflation by generating reasonably high returns. These are traits that modern bank FDs don’t possess. 

Fixed deposit returns barely beat inflation and at best, lie between the 4-5% range. However, FDs are still popular and trusted by many Indian investors. 

But why? It would help to understand the historical context of FDs to answer this question. You can consult a Cube Wealth coach or Download the Cube Wealth app.

The History Of Fixed Deposits In India

In the 1980s, RBI had given banks the freedom to set their own interest rates for FDs (up to 8%) that matured in a year. This limit was pushed to 13% in the 1990s for FDs that matured after 46 days.

Imagine having the option to invest in such a safe yet lucrative fin

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