FDR or DPS, which method should you choose for depositing money?

Two popular methods for saving money in banks are Fixed Deposit Receipts (FDR) and Deposit Pension Schemes (DPS).

You can choose any one method in accordance with your financial situation. In that case, it is essential to be aware of the bank’s reputation, financial condition, and interest rates.

In Bangladesh, two popular methods for saving money in government and private banks are FDR (Fixed Deposit Receipt) and DPS (Deposit Pension Scheme).

In FDR, customers deposit a large sum of money in a one-time transaction for a specified period. On the other hand, DPS is a popular method of saving money in instalments on a monthly basis.

Any Bangladeshi citizen aged 18 or above can open an FDR or DPS by filling out the designated form provided by the bank.

Faria Haque, Head of Priority Banking at City Bank PLC, explains that it is important to understand the bank’s reputation, financial condition, and interest rates before opening an FDR or DPS account. Keep in mind the bank’s financial security and profitability before opting for DPS or FDR.

Professor Khaled Mahmud of the Institute of Business Administration at Dhaka University stated, ‘‘If you have some extra money that you wish to invest for a short to medium term and want to keep risk to a minimum, then FDR is a safe and reliable option.

• At maturity, return of principal amount along with specified interest.

• Risk-free, immune to fluctuations in the market.

• It is possible to choose tenure according to your needs, ranging from 3 months to 10 years.

• Many banks provide loan facilities against FDRs; up to 90 per cent of the deposit amount can be availed as a loan in case of emergency.

• Easier to create funds for post-retirement life or for major projects.

• DPS is beneficial for those who wish to save little by little regularly from a limited income.

• Deposit money in monthly instalments and get back the principal amount along with profit after a specified period.

• Helps in building funds for your child’s education, your own future, or other long-term goals.

• Fosters a habit of regular savings. Tenure ranges from 2 to 20 years.

• Some banks also offer insurance benefits and loan facilities.

It is better to invest in small parts instead of opening a DPS account with a large amount at once. For example, if you want to deposit 5,000 taka per month, you can open two separate DPS accounts of 2,000 and 3,000 taka with different tenures (1 year and 3 years). After the tenure ends, you can withdraw the amount and use it again for an FD or a new DPS.

• If you have a large amount of cash in hand - FDR.

• If you want to save little by little every month - DPS.

• FDR pays monthly interest in many banks, while some banks return both the principal amount and interest at the end of the term.

• The process of opening an FDR or DPS can be done directly at the bank or online.

• Authenticated photocopy of national ID

• Proof of address (electricity, gas, water bill or bank statement)

• Two copies of passport-sized photos

• Nominee information (name, address)

• The application can be initiated online in 5-10 minutes.

• The correct documents and information, starting your savings will be quick and safe.