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Green fixed deposits (FDs) are a type of investment scheme offered by banks and financial companies, aimed at environmentally-conscious investors. They function similarly to traditional fixed deposits, where funds are locked in with a bank for a fixed tenure. The primary distinction between green and regular deposits lies in the allocation of funds. While regular deposits are pooled into a common fund, the funds from green deposits are exclusively allocated to projects that promote environmental sustainability.

Key Features of Green Fixed Deposits:

• Investment Purpose: The funds raised through green FDs are directed towards environmentally beneficial projects, such as renewable energy initiatives (solar and wind power), clean technology, organic farming, and energy-efficient infrastructure.
• Eligibility: Green deposits are available to various entities, including individuals, Hindu Undivided Families (HUFs), societies, clubs, non-profit organizations, and sole proprietorships.
• Interest Rates: The interest rates on green deposits may or may not differ from regular deposits, depending on the policies set by the lending institution. Some banks and financial institutions, like IndusInd Bank, Federal Bank, DBS Bank India, and HDFC Ltd., offer green deposits, with Bank of Baroda recently launching the BOB Earth Green Term Deposit with an interest rate of up to 7.15% per annum.
• Safety: Like regular fixed deposits, green deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) under the provisions of the DICGC Act, 1961, ensuring the safety of the investment.
• Overdraft Facility: Banks may offer overdraft facilities against green deposits, providing more flexibility to investors.
• Premature Withdrawal: If the investor chooses to withdraw the deposit before the agreed tenure (after six months), the green FD will be converted into a regular fixed deposit.
• Denomination: Green deposits are denominated in Indian Rupees only.