Should you invest in ICICI Bank FD Extra (FD Life, FD Invest and FD Income)?
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)?
Also Read: Top 10 High Return Mutual Funds for 2019
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.
You may like: Top 5 Bluechip Mutual Funds to invest in India
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.
If you enjoyed this article, share it with your friends and colleagues through Facebook and Twitter.
Should you invest in ICICI Bank FD Xtra (FD Life, FD Invest and FD Income)
- Avalon Technologies IPO Review – Should you Invest? - March 29, 2023
- ICICI Prudential Innovation Fund NFO – Issue Details and Review - March 26, 2023
- New Debt Mutual Funds Taxation Rules from 1-Apr-2023 - March 24, 2023
I recently came from US and have 10L lump sum amount which i would like to invest in FD
which FD will be financially beneficial.
Option 1 – FD in NRE A/C with 6.6% per annum (Interest is Tax free)
Option 2 – open join FD with my Mother in Co-op a/c with 8.5% per annum (TDS applicable)
Appreciate your response!
I came from USA recently and wants to open FD for 10L. I have NRE A/C in which I believe the interest earned on FD will be tax free. If I have to open FD, which would be financially beneficial option.
1. Open FD in NRE A/C with annual interest of 6.60% (tax free)
2. FD in Co-Op bank with annual interest of 8% (with TDS)
Hello Deepak, don’t go for co-op bank. There are many banks which are providing higher interest rates for NRE account. Pls approach HDFC Bank, Kotak, Axis Bank who are providing NRE FD rates between 7% to 7.5%
I want to know about ICICI Fixed Interval 370 days Income Fund. Is this an FMP? What is the meaning of 370 days? Will this mature after 370 days just like FMPs? What are its tax implications? Please explain in detail. Thanks. Naresh
Any fund with name containing days is close ended fund / FMP. This is FMP fund. The returns are considered on maturity. Since this is fixed interval and invests in debt instruments, STCG (< 3 years) would apply here. In this case it would be based on individual tax slab.
Thanks for the explanation.
Very good analysis. Thank you.
I was just about to ask your opinion on the new ICICI schemes and here you are, with your post! 🙂
I have one query on FD Invest: If I opt for it, would I need to pay tax for both (a) interest earned on the FD (as per my tax slab) and (b) returns from the MF (based on STCG or LTCG)? Or, as the bank takes care of reinvesting the interest directly to MF, I need to pay tax only for the returns on MF?
Hello Rajagopal, Thanks for your compliment. In simple terms your interest amount is invested through SIP in mutual funds. Means any amount invested by you in SIP mutual funds is similar to getting FD interest and you need to pay interest on that. Secondly if you are getting any returns from SIP mutual fund investments by selling them, you need to pay short term / long term capital gains.