What is an FDR?
FDR stands for fixed deposit receipt: a term deposit. You let a bank hold some money for a fixed period and agree not to take it out during that time. In return, the bank pays you interest at a rate settled at the start.
The bank lends your money to others and earns from it, passing part of that on to you as interest. Because you promise to leave the money untouched, the rate is usually higher than on an ordinary savings account.
Say Rahima has saved Tk 50,000 from her work bonus and won’t need it for the next year. She opens a one-year FDR at, say, 10% a year. At the end of the year the bank returns her Tk 50,000 plus Tk 5,000 of interest before tax.
How it works
You deposit a lump sum with a bank and choose a term: commonly 3 months, 6 months, 1 year, 2 years or 3 years. The interest rate agreed on the day you open it stays the same for the whole term. At maturity you receive the principal and the interest together.
If you do not withdraw at maturity, many banks renew the FDR automatically, but at the rate in force at that time, not the original one.
If you break it before maturity, the bank usually pays a lower rate, and may pay no interest at all if you break it very early. The rules differ from bank to bank, so ask when you open it.
Tk 100,000 kept for one year at 10% a year earns Tk 10,000 in interest. After 10% tax deducted at source, you receive Tk 9,000. The rate is only an example; actual rates vary by bank, term and over time.
Common variations
- Standard FDR
- Principal and interest paid together at maturity.
- Monthly or quarterly income schemes
- The principal stays locked while interest is paid out regularly. Many banks sell these under separate scheme names.
- Islamic term deposits (mudaraba)
- A profit-sharing contract instead of interest; the profit rate is provisional at first and finalised later.
- Loans against an FDR
- You can borrow against the FDR instead of breaking it; the loan rate is usually somewhat higher than the FDR rate.
How protected your money is
Repaying an FDR is the bank’s obligation. If a bank is closed, deposit protection law repays each depositor up to a set limit per bank. Under the Deposit Protection Act 2026, that limit is Tk 2 lakh (Tk 200,000). How safe any amount above that is depends on the bank’s financial health.
That is why many people split a large sum across several banks. A separate KhanFT video on checking a bank’s financial health for yourself is on the way.
What return to expect
FDR rates do not stay put. From 2020 to 2023, while lending rates were capped, many banks paid deposit rates of around 5–7%. After interest rates were left to the market in 2024, many banks’ rates rose to 9–12%.
If one bank offers far more than others at the same time, ask why. Weaker banks often pay higher rates to attract deposits, so a higher rate can come with higher risk.
To see your real gain, take out tax and inflation. In some recent years inflation was close to 9–10%; at those times, the real return on an FDR after tax was close to zero or below it.
Why people choose it
- Easy to open and offered by almost every bank.
- The rate is fixed for the term, so you know in advance what you will get.
- Short terms are available, so it suits money you need back soon.
- You can borrow against it instead of breaking it.
Points to weigh
- When inflation is high, the real return can be very low or negative.
- Breaking it early cuts the interest.
- Money above the deposit protection limit is only as safe as the bank.
- On auto-renewal, the new rate may be lower than the old one.
Tax
The bank deducts tax at source when it pays interest. Under the Income Tax Act 2023, in recent years this has been 10% if you have a TIN (Taxpayer Identification Number) and 15% if you do not; the annual Finance Act can change these rates.
FDR interest is part of your total income. When you file a return, the tax already deducted is set against your total tax.
In addition, once the balance crosses a threshold, an excise duty is deducted once a year. The slabs are set in the Finance Act and change from time to time.
Tax rules can change with each year’s Finance Act. Before a big decision, check the latest rules or speak to a tax adviser.
How to get started
- Choose a bank. Look at its financial health, not only its rate.
- Take your documents: national ID card, photographs, your nominee’s ID and photograph, and your TIN certificate if you have one.
- Many banks first ask you to open a savings or current account, where the interest is paid.
- Get the term, rate, auto-renewal setting and early-withdrawal rules in writing.
- Keep the FDR receipt or certificate somewhere safe.
Check before you start
- Might I need this money before the term ends?
- Have I compared rates for the same term at several banks?
- If the rate is far above others, do I understand why?
- Does my total at this one bank exceed the deposit protection limit?
- Do I know whether auto-renewal is switched on?
- Is a nominee properly recorded?