What’s FDR Full Form?

Whenever you have some bank-related work, you must have heard of the term FDR. But what does the acronym mean, and what is its purpose? In this blog, we will focus on FDR full form and explain what it stands for and how it is used.

FDR Full Form

The FDR full form stands for Fixed Deposit Receipt, a document that serves as proof of investment in a fixed deposit scheme. A fixed deposit is a type of savings account that offers a higher interest rate than a regular savings account but requires the depositor to lock in their money for a fixed period of time. 

A fixed deposit receipt contains details such as the name of the depositor, the amount deposited, the interest rate, the maturity date, and the terms and conditions of the scheme. An FDR can be used as collateral for loans or as proof of income for tax purposes.

Benefits of Fixed Deposit Receipts

Fixed deposit receipts have many benefits for both depositors and banks. Here are some of them:

• For depositors: Fixed deposit receipts offer a guaranteed return on their investment, as they receive a fixed interest rate that is usually higher than other savings options. They also have the flexibility to choose the duration of their deposit, from a few months to several years, and can avail tax benefits under certain conditions, such as investing in tax-saving fixed deposits or submitting Form 15G/15H to avoid tax deduction at source.
• For banks: Fixed deposit receipts provide a stable source of funds, as they can use the money deposited by customers for lending or investing purposes. They also have lower operational costs, as they do not need to maintain passbooks or statements for fixed deposit accounts. They can also attract more customers by offering competitive interest rates and various schemes for different segments of customers.

Risks of Fixed Deposit Receipts

Fixed deposit receipts are generally considered safe and secure investments, but they also have some risks that depositors should be aware of. Here are some of them:

• Loss of liquidity: Depositors cannot withdraw their money before the maturity date without paying a penalty or forfeiting some interest. It can be problematic in case of emergencies or urgent needs.
• Inflation risk: The interest rate offered by fixed deposits may not keep up with the rising prices of goods and services over time. This can erode the purchasing power of the money invested and reduce the real returns.
• Credit risk: There is a possibility that the bank may default or fail to pay back the principal and interest to the depositors. It can happen due to various reasons, such as fraud, mismanagement, or insolvency. Although there is a deposit insurance scheme in India that covers up to 5 lakh rupees per depositor per bank, it may not be sufficient to cover the entire amount invested by some customers.

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We hope this post has helped you understand what FDR full form stands for and how it is used in different fields and situations. Check out this full forms list and keep following Leverage Edu to discover and learn more acronyms like these.