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In such circumstances, interest is paid on the price relevant on the time of withdrawal. For example, a deposit is made for 5 years at 8%, but is withdrawn after 2 years. If the speed applicable on the date of deposit for two years is 5 per cent, the curiosity might be paid at 5 per cent. Usually in India the interest on FDs is paid every three months from the date of the deposit (e.g. if FD a/c was opened on 15 Feb, the primary curiosity installment would be paid on 15 May). The curiosity is credited to the customers’ Savings bank account or despatched to them by cheque. This is a Simple FD. The buyer could choose to have the interest reinvested in the FD account.

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