ICICI Bank FD Xtra (FD Life, FD Invest and FD Income) – Should you invest?
Few days back, ICICI Bank has launched innovative fixed deposits FD Xtra where one can get free term insurance plan, can invest in SIP mutual funds and get fixed income. ICICI Bank states that these unique FD Schemes are designed to meet life needs and much more. It says such FD scheme is 100% protected while interest is invested in mutual fund schemes. What is this ICICI Bank FD Xtra all about? What is ICICI Bank FD Xtra FD Life variant? What is ICICI Bank FD Xtra of investing in Mutual Funds through SIP? What is an FD Income option in ICICI Bank FD Xtra term deposit? Should you invest in ICICI Bank FD Xtra (FD Life, FD Invest and FD Income)?
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About ICICI Bank FD Xtra Term Deposit Scheme
Post budget 2019, the TDS on fixed deposit is raised from Rs 10,000 to Rs 40,000. Many investors are not aware that it is only TDS that is raised, however income tax needs to be paid on such fixed deposit interest income based on income tax slab. Many banks have now started attracting on this theme “No TDS upto Rs 40,000 interest”. Several banks started increasing FD interest rates to attract investors expecting there would sudden surge in fixed deposits. ICICI Bank has launched during this time to attract fixed deposit investors.
What is ICICI Bank FD Xtra Term Deposit Scheme?
ICICI Bank FD Xtra is an innovative Term deposit Scheme launched to attract investors. This term deposit is designed to meet life needs and goals of the customers which includes Mutual Fund SIP investments, term insurance plans, save for a down payment for a home or car, retirement planning, saving for child education and saving some money for international travel.
ICICI Bank has come up with 3 variants in FD Xtra.
A) ICICI Bank FD Xtra – FD Life
It is the 1st variant in the FD Xtra scheme floated by ICICI Bank. Here are the features.
1) FD Life offers for individuals between 18 to 50 years of age.
2) The amount invested in this FD scheme offers investment growth via FD and also offers free term insurance plan for FD holder
3) The free Term insurance plan is offered by ICICI Prudential Life Insurance company.
4) The term insurance plan is offered for Rs 3 Lakhs sum assured for a period of 1 year. The customer has an option to renew from 2nd year, which is optional.
5) Minimum amount of FD should be Rs 3 Lakhs and minimum tenure of the FD should be 2 years.
B) ICICI Bank FD Xtra – FD Invest
2nd Variant in ICICI Bank FD Xtra is FD Invest. Here are the features under this option
1) Interest received on FD invested through FD invest option would be invested in Systematic Investment Plan (SIP) of a mutual fund scheme.
2) SIP of the mutual fund scheme would be from ICICI Prudential Asset Management company. i.e. Mutual fund scheme is from ICICI Mutual Funds only.
3) Minimum amount of investment is Rs 2 Lakhs and minimum tenure is 1 year.
4) ICICI Bank indicates that FD invest option would safeguard the principal FD amount and offers a nice feature of investing only interest in the SIP of mutual funds. Means your capital is protected.
C) ICICI Bank FD Xtra – FD Income
This is the 3rd variant in the FD Xtra scheme offered by ICICI Bank. Here are the features
1) This option is available in the form of FDs and RDs.
2) There is flexibility to receive the maturity amount in the way it suits your goals.
3) Maturity amount is paid as monthly income for the tenure of your choice.
4) Alternatively 30% of the lump sum is paid on maturity and balance 70% is paid as monthly income for the tenure chosen by the investor.
Maximum tenure for all the variants of the FD extra is 10 years, including investment period and payout periods.
How to apply ICICI Bank FD Xtra option for FD Life, FD Invest and FD Income schemes?
Currently, if you want to opt these schemes, you need to visit ICICI Branch near to you. Alternatively, if you want to open FD Income option, you can do it only through internet banking.
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Should you invest in ICICI Bank FD Xtra (FD Life, FD Invest and FD Income)?
No doubt FD Xtra from ICICI Bank is the unique, innovative product in the fixed deposit segment. Let me review each of the variants.
1) ICICI Bank FD Xtra – FD Life – One would get free term insurance plan of Rs 3 Lakhs for 1 year for a deposit of Rs 3 Lakhs for 2 years. Your FD would be locked for 2 years. Currently we are taking Rs 50 Lakhs or Rs 1 Crore term plan based on our current expenses. What is the worth of Rs 3 Lakhs sum assured then? Think… Think…. If you still want to lock some FDs to earn interest and simultaneously have term insurance cover, you can go ahead and do that.
2) ICICI Bank FD Xtra – FD Invest – Bank would invest interest in ICICI mutual fund SIP scheme if you can do an FD scheme for Rs 2 Lakhs for 1 year. The SIP amount is coming from your FD interest. E.g. if you invest Rs 1 Lakh @ 7.5% interest rate, you would get Rs 7,500 interest per annum. They would do SIP in ICICI Mutual Funds for this amount (monthly or quarterly or yearly not specified). Why you want to invest only in ICICI Mutual Funds. You may opt for interest option (quarterly / half yearly) in any bank FD and invest such interest into a SIP mutual funds that has a MF portfolio from all AMCs including ICICI MF.
3) ICICI Bank FD Xtra – FD Income – This is like pension amount where you invest lump sum can get a fixed amount for a definite period. There is no principal amount that would be left out after the tenure. If you think this could be alternative to pension plan, you can go for it after checking the terms and conditions of this option.
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Should you invest in ICICI Bank FD Xtra (FD Life, FD Invest and FD Income)