Economics · Economy
How do Floating Rate Term Deposits (FRTD) differ primarily from traditional fixed-rate Fixed Deposits?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The interest rate on FRTD only adjusts upwards; it remains unchanged if the benchmark rate falls.
- 2FRTDs strictly prohibit premature withdrawal under any circumstances, unlike regular Fixed Deposits.
- 3The interest rate on FRTD is linked to a benchmark rate (such as the RBI Repo Rate) and is reset periodically during the tenure.✓
- 4The interest rate on FRTD is fixed at inception, but the final maturity amount changes based on the Consumer Price Index.
Correct answer
The interest rate on FRTD is linked to a benchmark rate (such as the RBI Repo Rate) and is reset periodically during the tenure.
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