Monthly Interest for ₹40 Lakhs Fixed Deposit (FD) in 2024

Investing ₹40 lakhs in a Fixed Deposit (FD) can be an excellent way to generate a steady stream of monthly income. Whether you're looking to fund your retirement, meet monthly expenses, or simply grow your wealth safely, FDs remain popular among conservative investors.

Here, we’ll explore how much monthly interest you can earn on a ₹40 lakh FD in 2024 across different banks, along with some essential tips to make the most of your investment.

How Much Monthly Interest Can You Earn on ₹40 Lakhs FD?

The monthly interest on an FD depends on the bank’s offered interest rate and the tenure of the deposit. For a 5-year tenure, here’s how much interest you can earn per month with some popular banks in 2024:

Bank Name	Interest Rate (5-Year Tenure)	Monthly Interest for ₹40 Lakhs FD
Bank of Maharashtra	5.80%	₹19,333
City Union Bank	6.25%	₹20,833
Central Bank of India	6.25%	₹20,833
State Bank of India (SBI)	6.50%	₹21,667
Punjab National Bank (PNB)	6.50%	₹21,667
Indian Overseas Bank	6.50%	₹21,667
Bank of Baroda	6.50%	₹21,667
Bank of India	6.50%	₹21,667
Axis Bank	7.00%	₹23,333
RBL Bank	7.10%	₹23,667
HDFC Bank	7.40%	₹24,667
ICICI Bank	7.60%	₹25,333

How Are Monthly FD Interests Calculated?

The following formula determines the interest you earn on an FD:

Simple Interest Formula: Interest = (Principal × Rate × Time) / 100

For example, with ₹40 lakhs invested at an annual interest rate of 7.5% for a 5-year tenure:

• Annual Interest = ₹40,00,000 × 7.5% = ₹3,00,000

• Monthly Interest = ₹3,00,000 / 12 = ₹25,000

Things to Consider Before Investing in a ₹40 Lakh FD

1. Compare Interest Rates Across Banks

Interest rates vary significantly among banks. Private banks like ICICI Bank and HDFC Bank often offer higher rates than public sector banks. Always compare rates to maximize your returns.

2. Choose the Right FD Tenure

Longer tenures usually offer better interest rates, but ensure the lock-in period aligns with your financial goals. A 5-year tenure is typically ideal for a stable income.

3. Premature Withdrawal Penalties

Banks may levy a penalty if you withdraw funds before the FD matures. Choose a bank with favorable premature withdrawal terms if you anticipate needing access to your funds.

4. Tax Implications on Interest

Interest earned from FDs is fully taxable under the “Income from Other Sources” category. Ensure you plan your taxes accordingly to avoid surprises.

5. Consider Senior Citizen Rates

If you’re a senior citizen, you may qualify for higher FD rates. Many banks offer an additional 0.25%–0.50% interest to senior citizens.

6. Safety of Deposits

While most bank FDs are safe, ensure the bank is well-rated and financially stable. Deposits up to ₹5 lakhs are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).

How to Open a Fixed Deposit?

You can easily open an FD online or offline. Here's how:

Online FD Opening:

1. Log in to your bank's internet banking or mobile app.

2. Select the “Open Fixed Deposit” option.

3. Enter the investment amount, tenure, and auto-renewal preferences.

4. Confirm the details to open the FD instantly.

Offline FD Opening:

1. Visit your nearest bank branch.

2. Fill out the FD application form and provide your KYC documents.

3. Deposit the amount via cash, cheque, or account transfer.

Frequently Asked Questions

1. Can I extend the tenure of my FD?

Yes, you can extend the FD tenure by opting for auto-renewal or renewing the deposit at maturity.

2. What happens if the depositor passes away before the FD matures?

In such cases, the FD is transferred to the nominee or legal heirs. They can either withdraw the amount or continue the FD until maturity.

3. How do I redeem my FD?

You can redeem your FD online via internet banking or by visiting the bank branch. The amount is credited to your linked savings account.

4. Can I open a ₹40 lakh FD with multiple banks?

Yes, you can split your investment across different banks to diversify and benefit from varying interest rates.

Conclusion

A ₹40 lakh FD can be a reliable way to secure consistent monthly income while keeping your principal safe. By choosing a bank with competitive interest rates and understanding the tax implications, you can maximize your earnings and meet your financial goals effectively. Always assess your liquidity needs and compare bank offerings before locking in your deposit.

Let your money grow steadily, one month at a time!