Fixed deposits on Zerodha (Blostem)

Zerodha offers fixed deposit (FD) products through Blostem, an affiliated platform that aggregates fixed deposit offerings from multiple banks and Non-Banking Financial Companies (NBFCs). Blostem is accessible from within the Zerodha account ecosystem and allows investors to compare rates across partner institutions and book FDs without visiting a branch.

Blostem operates as a distribution intermediary, not as a bank or NBFC itself. Fixed deposits booked through Blostem are directly with the issuing bank or NBFC; Blostem facilitates the application, documentation, and onboarding process.

What is Blostem

Blostem is a fintech platform focused on fixed-income products, primarily fixed deposits. It is affiliated with Zerodha and integrated into the Zerodha product suite. Investors with a Zerodha account can access Blostem through the Zerodha Console or through the Blostem website. The KYC information from the Zerodha account is shared (with consent) with Blostem to simplify the FD booking process.

Blostem is not a bank-like entity and does not issue FDs. It partners with licensed banks and RBI-registered NBFCs to offer their FD products to investors.

Partner institutions

Blostem’s partner list has included small finance banks, private sector banks, and select NBFCs with high credit ratings. Small finance banks (SFBs) such as Suryoday, Ujjivan, Jana, and Utkarsh Small Finance Bank often offer rates higher than large commercial banks. These deposits are covered by DICGC insurance.

NBFCs with high credit ratings (typically CRISIL AA or above) offer NBFC FDs through Blostem at rates that can exceed bank FD rates by 1% to 2%. NBFC FDs are not covered by DICGC; credit risk of the NBFC must be assessed by the investor.

DICGC deposit insurance

Bank FDs (including small finance bank FDs) are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of RBI, up to Rs 5,00,000 per depositor per bank. This insurance covers:

• Savings, current, recurring, and fixed deposits.
• Deposits in all branches of the same bank are aggregated for the Rs 5 lakh limit.

NBFC FDs are not insured by DICGC. Investors placing FDs above Rs 5 lakh in a single bank or investing in NBFC FDs bear the credit risk of the issuing institution.

Interest rates and tenure

Interest rates offered through Blostem depend on the partner institution and tenure selected. Rates can vary significantly:

• Large commercial banks (SBI, HDFC Bank): 6.5% to 7.5% per annum (as of 2025; actual rates change frequently).
• Small finance banks: 7.5% to 9.0% per annum.
• NBFCs (AA-rated): 8.0% to 9.5% per annum.

Tenures typically range from 7 days to 10 years. The highest rates are generally offered for tenures of 1 to 3 years.

How to book an FD through Blostem

1. Access Blostem from the Zerodha console or blostem.in.
2. Compare rates across partner institutions and tenures.
3. Select the institution and tenure; verify interest calculation method (simple or compound; quarterly/annual payout or cumulative).
4. Complete the application using Aadhaar-linked eKYC (pre-populated from Zerodha account data where available).
5. Fund the FD from a linked bank account.
6. Receive the Fixed Deposit Receipt (FDR) electronically.

The entire process is digital for institutions supporting eKYC. For some institutions, physical documentation may still be required.

Interest payout options

FDs through Blostem typically offer:

• Cumulative option: Interest compounds annually (or at the stated compounding frequency) and is paid at maturity along with principal.
• Non-cumulative option: Interest paid monthly, quarterly, half-yearly, or annually as selected.

Senior citizens (age 60 and above) are typically offered an additional 0.25% to 0.50% per annum interest rate by partner banks and NBFCs.

Premature withdrawal

Premature withdrawal terms depend on the issuing bank or NBFC’s policies. Most institutions:

• Charge a penalty of 0.5% to 1% of interest for premature withdrawal.
• Do not allow premature withdrawal within the first lock-in period (if any).

Blostem facilitates premature withdrawal requests for eligible FDs through its platform.

Tax treatment

Interest income

FD interest is taxable under the head “Income from Other Sources” at the investor’s applicable slab rate. Interest accrues annually on the tax return even for cumulative FDs (where cash is not received until maturity), under the accrual method of income recognition.

TDS on FD interest

Banks deduct TDS at 10% on interest exceeding Rs 40,000 per year (Rs 50,000 for senior citizens) per bank. If the investor’s PAN is not provided, TDS is deducted at 20%. Form 15G (for individuals whose total income is below the taxable limit) or Form 15H (for senior citizens) can be submitted to prevent TDS deduction.

TDS certificates (Form 16A) are issued by the bank at the end of each financial year. These can be downloaded from TRACES (TDS Reconciliation Analysis and Correction Enabling System).

NBFC FD taxation

Same as bank FD: interest is taxable at slab rate. TDS on NBFC FD interest is deducted at 10% on interest exceeding Rs 5,000 per year per NBFC.

Comparison with liquid mutual funds

For short-duration investing (less than 3 months), liquid mutual funds (available on Coin) may offer similar or better post-tax yields with daily liquidity. However:

• Liquid fund returns are not guaranteed; they depend on prevailing money market rates.
• FDs offer fixed, guaranteed returns.
• Post Finance Act, 2023, liquid fund gains for units purchased on or after 1 April 2023 are taxed at slab rate (no indexation benefit), similar to FD interest.

FDs are preferable when the investor wants guaranteed returns and does not need daily liquidity. Liquid funds are preferable for very short-term parking where daily redemption flexibility is important.

References

1. RBI, Guidelines on Fixed Deposits: Interest Rates and Premature Withdrawal.
2. DICGC, Deposit insurance coverage framework.
3. Income Tax Act, 1961, Section 194A (TDS on FD interest), Section 56 (Income from Other Sources).
4. RBI Master Direction, Non-Banking Financial Company regulations on public deposits.
5. SEBI, Blostem/Zerodha registration status (relevant intermediary registration).