? Mobilization of Fixed Deposits – Detailed Explanation
Mobilization of fixed deposits refers to the process through which banks, Non-Banking Financial Companies (NBFCs), corporates, and financial institutions raise funds from the public in the form of fixed-term deposits. These deposits are accepted for a specific period at a predetermined rate of interest. Mobilizing fixed deposits is one of the most important methods for institutions to secure long-term and stable funds needed for lending, investment, business expansion, or liquidity management.
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1️⃣ Meaning of Fixed Deposits (FDs)
A Fixed Deposit is a financial instrument in which an individual deposits a sum of money for a fixed tenure, and in return receives assured interest. Organizations mobilize these deposits by attracting customers and encouraging them to invest.
Example:
If HDFC Bank offers 7.5% interest for a 3-year FD, customers deposit money, and the bank uses these funds for loans, investments, and other financial operations.
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2️⃣ What is Mobilization of Fixed Deposits?
Mobilization means collecting or attracting deposits from the public through well-planned strategies, schemes, promotional efforts, and regulatory compliance.
It includes:
Designing attractive deposit schemes
Offering competitive interest rates
Advertising and marketing campaigns
Providing safety assurance
Maintaining reputation and trust
Meeting RBI/Company Law compliance
The aim is to secure long-term, low-cost funds for the institution.
Banks & NBFCs use websites, apps, and quick online KYC to attract deposits.
Example: HDFC Bank offers “Instant FD” through net banking.
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6. Loyalty Benefits and Additional Rates
Institutions give extra interest to:
Existing customers
Senior citizens
Staff members
Example: ICICI Bank offers +0.10% extra to its account holders.
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7. Safety Ratings & Credibility
High CRISIL ratings attract customers.
Example: Bajaj Finance FDs have FAAA CRISIL rating ensuring safety.
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6️⃣ Regulatory Framework for Mobilizing Fixed Deposits
Mobilization of FDs is strictly regulated because it involves public money.
A. For Banks – Regulated by RBI
Banks follow:
RBI's interest rate guidelines
KYC/AML rules
Deposit insurance norms
Bank FDs are insured up to ₹5 lakh under DICGC.
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B. For NBFCs – Regulated by RBI
NBFCs must:
Maintain minimum Net Owned Funds (NOF)
Obtain RBI approval to accept deposits
Follow interest rate caps
Maintain credit rating
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C. For Companies – Under Companies Act 2013
Companies must:
Issue a circular
File with ROC
Maintain deposit repayment reserve
Provide deposit insurance
Follow limits defined under the Companies Rules (Acceptance of Deposits)
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7️⃣ Advantages of Mobilizing Fixed Deposits
For Institutions
Stable, long-term capital
Lower borrowing cost
Improves liquidity
Helps expansion and diversification
For Customers
Safe investment
Guaranteed returns
Regular income (non-cumulative FD)
Useful for retirement planning
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8️⃣ Risks in Mobilizing Fixed Deposits
Mismanagement of funds
Liquidity problems if too many withdrawals occur
Failure to renew credit ratings
Competition from banks & mutual funds
Example:
When IL&FS collapsed in 2018, it created trust issues for FDs of some NBFCs.
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9️⃣ Case Studies
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? Case Study 1: Bajaj Finance FD Mobilization Success
Bajaj Finance became one of India’s largest NBFCs by effectively mobilizing FDs through:
Attractive interest rates
100% digital onboarding
Strong credit rating
Targeting senior citizens and HNIs
Result:
It crossed ₹40,000 crore in deposit book by 2023.
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? Case Study 2: Sahara India FD Crisis
Sahara mobilized huge deposits without following regulations.
Outcome:
SEBI intervened
Funds seized
Investors faced delays
This case highlights why regulatory compliance is necessary.
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? Case Study 3: Post Office Fixed Deposits
The Indian Post Office mobilizes deposits through:
Trust factor
Government guarantee
Rural branch network
It is one of India’s largest mobilizers of small savings.
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? Conclusion
Mobilization of fixed deposits is a vital activity that allows banks, NBFCs, and companies to raise funds from the public. It strengthens the financial system, provides stable long-term capital, and supports business expansion. However, it must be done within regulatory frameworks to protect depositors and maintain trust. Real-world cases like Bajaj Finance and Sahara clearly show the impact of efficient and inefficient mobilization practices.
