In such circumstances, interest is paid on the fee applicable on the time of withdrawal. For example, a deposit is made for 5 years at 8%, however is withdrawn after 2 years. If the speed relevant on the date of deposit for two years is 5 per cent, the interest shall be paid at 5 per cent. Usually in India the curiosity on FDs is paid each three months from the date of the deposit (e.g. if FD a/c was opened on 15 Feb, the first curiosity installment could be paid on 15 May). The interest is credited to the customers’ Savings bank account or sent to them by cheque. This is a Simple FD. The customer may select to have the interest reinvested within the FD account.
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