Banking · Retail Banking
A Fixed Deposit (FD) differs from a Savings Account primarily because the funds are committed for a fixed tenor, which enables the bank to offer the customer a:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Complete tax exemption on the interest earned.
- 2Facility to withdraw money at any time by cheque without penalty.
- 3Higher, guaranteed rate of interest, as the bank can use the funds for long-term lending.✓
- 4Guaranteed overdraft facility equal to the deposit amount.
Correct answer
Higher, guaranteed rate of interest, as the bank can use the funds for long-term lending.
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