Fixed Deposits — Concept and Maturity Value

A Fixed Deposit (FD) is a lump-sum amount deposited with a bank for a fixed period at a fixed rate of interest, decided at the time of deposit. Unlike a savings account, the money cannot ordinarily be withdrawn before the agreed period ends; in exchange, the bank pays a rate of interest that is usually higher than a savings account's, and the interest is compounded — most commonly, Indian banks compound FD interest quarterly (every three months), though yearly, half-yearly and monthly FDs are also offered on some schemes.

This chapter is part of the WBCHSE Class 12 Commerce Business Mathematics and Basic Statistics syllabus, and it places special emphasis on FD and RD calculation specifically — the general theory of compound interest for all four compounding frequencies was already covered in the Class 11 Compound Interest chapter of this same syllabus; here, that formula is simply applied to the concrete case of a bank fixed deposit.

Recall the general compound-interest formula from Class 11: for a principal compounded $n$ times a year at annual rate $r\%$ for $t$ years,

The maturity value $A$ is what the depositor actually receives at the end of the FD's term; the interest earned is simply $A - P$. Every FD problem in this chapter reduces to correctly identifying $P$, $r$, $t$ and the compounding frequency $n$, and then applying this one formula — exactly the skill already practised in the Class 11 Compound Interest chapter, now framed around a real bank product.