Principal
The original sum of money deposited into a Fixed Deposit, on which interest is calculated.
Principal refers to the initial amount you deposit into the FD. It's the base on which interest is computed. In a cumulative FD, while the effective calculation base grows each quarter (as interest is added), the 'original principal' for banking records remains the amount you deposited. In non-cumulative FDs, interest is always calculated on this fixed principal amount. The minimum principal for FDs varies: ₹1,000 at SBI, ₹5,000 at HDFC Bank, ₹10,000 at most NBFCs, and ₹1,000 for Post Office Time Deposits. There's generally no maximum limit for bank FDs, though rates may differ for deposits above ₹3 crore (bulk deposits). Tax-saving FDs under Section 80C allow principal deduction up to ₹1,50,000 per financial year.