Summary: Federal Bank’s resident Cash Certificate is a reinvestment term deposit in which interest is accumulated for payment with principal at maturity. For a single deposit below ₹300 lakh, the bank’s rate card effective 29 September 2026 shows 6.65% per annum for the general public and 7.15% per annum for eligible senior citizens at the exact 15-month tenor. The scheme starts at ₹1,000, allows joint holding, nomination, premature withdrawal subject to the applicable interest recalculation and penalty policy, and permits a loan of up to 90% of deposit value subject to terms. Interest is taxable; TDS under the Income-tax Act, 2025 is a collection mechanism rather than the final tax. Federal Bank is listed by DICGC as an insured bank, but the cover is capped at ₹5 lakh for principal and interest aggregated in the same right and same capacity across the bank.
- Verified 15-Month Rate on 28 October 2026
- How the Federal Cash Certificate Works
- Reinvestment rather than periodic payout
- Holding, nomination and maturity instructions
- Illustrative Maturity Value: Use the Bank's Quote
- Premature Closure: Rate Reset Plus Penalty
- The certificate is callable
- Why the booked 15-month rate may not survive
- Loan Against the Certificate
- Income Tax and TDS for Tax Year 2026-27
- Interest remains taxable even when reinvested
- Section 393 thresholds and rate
- Form 121 and final tax liability
- DICGC Cover: Bank-Wide, Not Certificate-Wise
- Frequently Asked Questions
- 1. What is Federal Bank's exact 15-month Cash Certificate rate?
- 2. Is the 15-month rate available for a 14-month deposit?
- 3. What is the minimum investment?
- 4. Can the certificate be closed before 15 months?
- 5. Is interest tax-free because it is reinvested?
- 6. Does TDS at 10% settle the final tax?
- 7. Is each certificate insured up to ₹5 lakh?
- Key Takeaways
Verified 15-Month Rate on 28 October 2026
Federal Bank’s resident term-deposit rate page states that the rates are effective from 29 September 2026. For single deposits below ₹300 lakh, the exact 15-month Cash Certificate rate is 6.65% per annum for the general public and 7.15% per annum for senior citizens. The rate is a contracted nominal annual rate for a deposit opened while that card is in force; it is not a promise that a later deposit will receive the same rate.
The 15-month line should not be confused with nearby tenors. Above one year but below 15 months carries 6.55% for the general public and 7.05% for senior citizens, while above 15 months to 24 months carries the same 6.55% and 7.05%. A maturity instruction for exactly 15 months is therefore material. The bank’s page also distinguishes ordinary resident Cash Certificate rates from Deposit Plus and non-resident products, which have separate eligibility and conditions.
| Resident Cash Certificate tenor | General public | Senior citizen |
|---|---|---|
| 1 year | 6.25% p.a. | 6.75% p.a. |
| Above 1 year to below 15 months | 6.55% p.a. | 7.05% p.a. |
| Exactly 15 months | 6.65% p.a. | 7.15% p.a. |
| Above 15 months to 24 months | 6.55% p.a. | 7.05% p.a. |
| 48 months | 6.70% p.a. | 7.20% p.a. |
These selected lines reproduce the official rate card for comparison; they do not rank the tenors. A depositor should confirm the live page, deposit amount, resident status, age eligibility, payout or reinvestment option and maturity date immediately before booking.
How the Federal Cash Certificate Works
Reinvestment rather than periodic payout
Federal Bank describes the Cash Certificate as a fixed-deposit scheme for investing a lump sum for a fixed tenure and receiving accumulated value at maturity. It is a reinvestment product, so it differs from a monthly or quarterly interest-payout deposit. The scheme page states a minimum investment of ₹1,000, tenure from six months to ten years, and no general maximum investment amount on the product page, although rate slabs and operational approvals differ for large deposits.
Holding, nomination and maturity instructions
The certificate may be opened singly or jointly, including ‘jointly’ or ‘either or survivor’ modes, subject to bank documentation. Nomination is an important succession facility but does not by itself decide all beneficial-ownership or inheritance disputes. The customer should record a maturity instruction—credit, renewal or another permitted option—and verify the linked account. The product page says that if the certificate is not renewed, principal and earned interest are credited to the linked savings or current account.
Illustrative Maturity Value: Use the Bank’s Quote
A Cash Certificate accumulates interest, so the maturity value depends on the bank’s compounding method, completed quarters, treatment of the residual period, date conventions and rounding. A simple-interest multiplication is not the contractual maturity calculation. The official rate page publishes an effective annualised return table for reinvestment deposits; the customer should rely on the deposit advice or the bank’s live calculation for the exact rupee maturity value.
For illustration only, a ₹1,00,000 deposit booked for exactly 15 months at 6.65% has a nominal rate reference of ₹6,650 per full year before compounding and tax. The actual 15-month maturity amount is not obtained by treating that annual figure as a guaranteed cash payout schedule. Senior-citizen eligibility, booking date and deposit category must be confirmed at opening. This illustration is not a return forecast or recommendation.
Premature Closure: Rate Reset Plus Penalty
The certificate is callable
Federal Bank permits premature withdrawal of Cash Certificates, subject to charges and policy. The resident rate page states that for rupee term deposits opened or renewed from 21 October 2022, a single deposit below ₹3 crore carries no penal interest when maintained for up to and including 15 days and a 1% penal interest when maintained for more than 15 days. A single deposit of ₹3 crore or more carries the displayed 1% penalty in both bands. The relevant slab is based on the period for which the deposit was actually maintained, irrespective of the original contracted tenor.
Why the booked 15-month rate may not survive
On early closure, the bank ordinarily determines interest by reference to the rate applicable on the original booking date for the actual completed period, then applies the applicable penalty under its policy. The depositor should obtain a closure quotation because an exact shorter-period rate, completed tenure, minimum-period rule and penalty can materially reduce accrued interest. The 6.65% or 7.15% contracted for a completed 15 months should not be used to estimate a premature exit.
| Actual period maintained | Penalty shown for single deposit below ₹3 crore | Review point |
|---|---|---|
| Up to and including 15 days | 0% penal interest | Interest entitlement for very short closure still follows bank terms |
| More than 15 days | 1% penal interest | Applicable shorter-period rate and penalty both affect proceeds |
| At full 15-month maturity | No premature-closure penalty | Contracted rate and reinvestment calculation apply |
Loan Against the Certificate
The product page says a loan may be available up to 90% of deposit value, subject to the bank’s terms. A loan is not the same as withdrawing the deposit: the certificate remains under lien, interest on the borrowing is charged separately, and repayment or set-off rules apply. The deposit’s interest rate should not be compared with the loan rate as though the difference were the only cost; documentation charges, repayment timing and the consequences of default must also be checked.
A depositor considering liquidity should request both a premature-closure quotation and a loan quotation. The lower immediate cash outflow of a loan can be offset by interest cost and lien restrictions. No general conclusion is appropriate without the required amount, expected duration, tax position and bank quote.
Income Tax and TDS for Tax Year 2026-27
Interest remains taxable even when reinvested
Cash Certificate interest is taxable under the applicable income-tax provisions; Federal Bank states that the principal investment does not receive a tax benefit merely because it is placed in this product. Reinvestment does not make the accrued interest tax-free. The timing and method of recognising interest depend on the taxpayer’s applicable computation method and facts. The deposit certificate, annual interest statement and Form 168 or other current tax-information record should be reconciled before filing.
Section 393 thresholds and rate
For tax year 2026-27, section 393(1) of the Income-tax Act, 2025 governs deduction on resident interest other than interest on securities. The official rate table states a 10% TDS rate. For interest on time deposits paid by a banking company, the threshold is ₹1,00,000 for a senior citizen and ₹50,000 for another resident payee. The threshold concerns the aggregate interest credited or paid under the statutory rule, not each certificate viewed in isolation. Where tax is deductible, it is deducted on the relevant interest amount as provided by law, not merely on the excess over the threshold.
Form 121 and final tax liability
An eligible resident with nil estimated tax liability may use Form 121 under the Income-tax Rules, 2026, the current declaration corresponding to the former Forms 15G and 15H framework, subject to section 393(6) conditions. A declaration should never be submitted merely to improve cash flow when the legal conditions are not met. TDS is credit toward final tax, not a concessional final rate: interest remains reportable and the actual liability depends on the taxpayer’s total income, deductions, regime and rates. PAN and bank records should be kept current to avoid mismatches or higher statutory deduction consequences.
DICGC Cover: Bank-Wide, Not Certificate-Wise
DICGC’s official list of insured banks includes Federal Bank Ltd. Eligible bank deposits, including fixed deposits, are insured within the statutory framework. The maximum cover is ₹5 lakh for principal and accrued interest together for one depositor in the same right and same capacity across all branches of the same bank. Multiple Cash Certificates, savings accounts and other eligible deposits in the same ownership category are aggregated; opening several certificates does not multiply the cover.
Different banks receive separate cover, and genuinely different rights or capacities may receive separate treatment under DICGC rules. Joint accounts are assessed according to the holders and their order. DICGC also explains that the bank may set off legally recoverable dues before the insured amount is determined. The ₹5 lakh ceiling is deposit insurance for specified bank-failure events, not a guarantee against interest-rate changes, premature-closure loss, fraud by third parties or every operational dispute.
Frequently Asked Questions
1. What is Federal Bank’s exact 15-month Cash Certificate rate?
For a resident single deposit below ₹300 lakh, the rate card effective 29 September 2026 shows 6.65% for the general public and 7.15% for eligible senior citizens.
2. Is the 15-month rate available for a 14-month deposit?
No. The official card has a separate band above one year and below 15 months, at 6.55% and 7.05% respectively.
3. What is the minimum investment?
Federal Bank’s Cash Certificate page states a minimum of ₹1,000.
4. Can the certificate be closed before 15 months?
Yes, it is callable, but the applicable shorter-period rate and the bank’s premature-withdrawal penalty policy determine the proceeds.
5. Is interest tax-free because it is reinvested?
No. Reinvestment changes the payment pattern, not the basic taxability of interest.
6. Does TDS at 10% settle the final tax?
No. TDS is a credit. Final tax depends on the depositor’s total taxable income and applicable provisions.
7. Is each certificate insured up to ₹5 lakh?
No. DICGC aggregates eligible deposits across Federal Bank held in the same right and same capacity, including principal and interest, and applies one ₹5 lakh ceiling.
Key Takeaways
- The verified exact 15-month resident rate is 6.65% for the general public and 7.15% for senior citizens, effective 29 September 2026, for single deposits below ₹300 lakh.
- The Cash Certificate is a reinvestment, callable term deposit; periodic payout assumptions are inappropriate.
- Early closure can replace the contracted rate with the applicable actual-period rate and add a 1% penalty after 15 days for the displayed retail slab.
- Interest is taxable; section 393 TDS thresholds do not create an exemption from tax.
- Form 121 is only for eligible nil-tax declarations under the current law.
- DICGC cover is capped at ₹5 lakh for principal plus interest aggregated in the same right and same capacity across Federal Bank.
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Disclaimer: This article is general educational information about Federal Bank’s resident 15-month Cash Certificate and related tax and deposit-insurance concepts, based on official pages reviewed on 28 October 2026. It is not a recommendation, ranking, investment solicitation, personalised return calculation, tax opinion or assurance by Federal Bank, RBI, DICGC or TaxGuru. Deposit rates, special-tenor availability, senior-citizen eligibility, amount slabs, compounding, maturity values, account-opening channels, nomination, loan margins, premature-closure methodology, penalties and operational conditions can change and may differ by booking date, deposit size, customer category and documentation. The illustration does not state a contractual maturity amount. Depositors should obtain the live rate card, product terms, deposit advice, closure quotation and tax statement directly from the bank before acting. Income-tax treatment depends on residence, beneficial ownership, total income, accounting method, deductions, tax regime, PAN, declarations and later amendments. Form 121 may be used only when its statutory conditions are met; TDS is not the final tax. DICGC cover is subject to the governing Act, eligible-deposit rules, aggregation in the same right and capacity, accrued interest, set-off and specified bank-failure events; it is not an unlimited guarantee of every amount or loss. TaxGuru accepts no responsibility for any error, omission, changed rate or law, maturity shortfall, premature-closure reduction, tax demand, TDS mismatch, invalid declaration, uninsured balance, bank restriction, loss or decision made in reliance on this material. Readers should independently verify current official terms and seek qualified financial and tax advice suited to their circumstances.
