A fixed deposit and bond platform is an app that sells fixed deposits (FDs) from many banks and bonds from many issuers in one place, so that savers can compare rates and invest without visiting each bank. A fixed deposit is money that you leave with a bank for a fixed period, at a fixed rate of interest. A bond is a loan that you make to a company or a government. The borrower pays you interest regularly and repays the full amount at the end.
Interest rates on FDs differ a lot from bank to bank. Small finance banks, which are licensed banks that mainly serve small borrowers, often pay more than large banks. Comparing them used to mean visiting each bank's website or branch. The platform shows them side by side. It also lets you open an FD in a bank where you have no account, without visiting a branch.
Here is a typical case. A retired schoolteacher in Thrissur has ₹4 lakh to invest for one year. Her own bank offers 6.8%. The platform shows a small finance bank offering 8.1%. On ₹4 lakh, the difference is ₹5,200 in a year. She completes KYC in the app with her PAN card and Aadhaar. The platform sends her details to the bank. The bank's core banking system opens the FD in her name. Her ₹4 lakh goes straight from her own bank account to the new bank. The platform never holds her money. It earns a commission from the bank. Selling a bank's products inside another company's app in this way is a kind of banking as a service.
Is the money safe? In India, DICGC, a corporation owned by the RBI, insures deposits up to ₹5 lakh per depositor in each bank. Her ₹4 lakh is within that limit.
Bonds carry more risk than insured deposits. So the platform shows each bond's rating from a credit rating agency. AAA is the highest rating. A higher interest rate usually means a higher risk that the borrower will not repay. In India, SEBI regulates online bond platforms, and the bonds are held in the investor's demat account.
Some platforms also link an FD to a secured credit card. The FD is security for the card's limit. A person with no credit history can use such a card to build a credit score.