Non-Cumulative FD
A Fixed Deposit where interest is paid out at regular intervals (monthly, quarterly, half-yearly, or annually) instead of being reinvested.
Non-cumulative FDs distribute interest periodically rather than accumulating it until maturity. You choose your payout frequency — monthly, quarterly, half-yearly, or annually. The principal remains unchanged throughout the tenure, and at maturity you receive only the original deposit back. Monthly payouts are most popular among retirees for meeting living expenses. The interest per payout is calculated as simple interest for that period. On ₹10,00,000 at 7.50%, monthly payout is approximately ₹6,250. The trade-off is clear: lower total interest earned versus a cumulative FD, but steady cash flow. Banks calculate the monthly/quarterly payout rate by converting the annual rate — the effective per-month amount may be slightly less than annual rate divided by 12.