Flexiblity At A Price

You have some money in a fixed deposit scheme. Obviously, you love the high interest earned on it. Imagine, you need some money in an emergency, and the cash in your savings bank account just wont suffice.

What would you do? You know, breaking up your fixed deposit means a plethora of procedures and applications. Add to this the time taken, a hefty interest as a penalty for breaking the FD.

Do you think it is justified? To put your hard earned money in a pit from where it is extremely difficult to withdraw. Dont you mind being denied the money just because you earn a higher interest on it.

On the other hand, how would you like an FD account that can be broken up? That is, an FD account which allows you to withdraw money when you need it.

Of course, you pay a penalty, but only minimal. But at the same time you earn a very high interest rate. Doesnt this sound like the answer to your worries?

Surely, a simple fixed deposit facility is redundant in these days, what with the newer and better facilities offered by the foreign and a few Indian banks.

For starters, in fixed deposit you lock up your money for a definite period of time and earn a higher interest rate than the savings bank account. The difference being unlike a savings bank account, you cant withdraw money from an FD at any given time.

True, most PSUs and Co-operative banks still have only the conventional FDs which do not offer you flexibility at all.

The banks have the gall to tell us that we can go to a foreign bank if we need any advanced facilities. Actually, they are not ready to better their standards, says a customer of a PSU bank.

The fare: Well, the ordeal will be over for you, the moment you walk into any of the foreign banks like the Hong Kong Bank, Standard Chartered Bank, Dresdner Bank, Citibank or into any Indian private banks like Indus Ind, ICICI and Times Bank. All these banks provide Flexible Fixed Deposit schemes that give you a high interest rate and an opportunity to withdraw almost the entire amount at the same time.

We offer tailor-made deposit packages for individuals, says Suraj L Mehta, CEO, Dresdner Bank. His bank caters to the rich and affluent who have FDs worth 25 lakhs and offers facilities like breaking up of the account to the last paise, or total withdrawal.

Citibank, for instance, offers three flexible FD schemes -- Unique multi deposits, Money multiplier and the Unfixed deposits. This could be your bank only if you can keep an average monthly balance of Rs 3,00,000 collectively in all the accounts held by an individual.

The bank charges interest on overdrafts and a penalty for breaking an FD as per the RBI guidelines, breaks up the account into multiples of Rs1,000, provides free ATM cards, assistance is provided through 24 hour banking and customer activated self service terminals.

Hong Kong banks Smart Money account is an unique offer where a minimum of Rs 25,000 has to be maintained to earn an interest of 10 per cent per annum. At the same time, the same account can be used as a day to day savings account where you can earn 4.5 per cent interest.

Now if you want to withdraw from the FD, you can do that. But the bank will charge you 2.5 per cent interest on that amount. Additionally, you have free ATM Card that can be used to deposit, withdraw, carry out balance enquiries, make transfers, etc.

Also, you can use it to operate any other account you may hold with the Hong Kong bank.

Standard Chartered has a 2-in-1 account. Apart from the high interest and withdrawal facility, a cheque book or Moneylink ATM card can be used to withdraw the money and the bank also breaks your deposit for the amount you require, down to the last paise. On withdrawals, you will lose only one per cent of the interest.

As for the private Indian banks, Times Bank, Indus Ind all have similar offerings. You can earn higher interest, withdraw money, enjoy ATM facility, etc as with foreign banks.

To sum it up, if your purse is light, settle for Bank of India. Here the minimum deposit is just Rs 5,000. Indus Ind comes second with Rs 10,000. If you mind paying penalty for withdrawals, Dresdner is your choice. As for the interest rates, Stanchart pays 8.5 per cent for 30-45 days, and Indus Ind bank with 9% for 30-90 days.