What is compounding frequency in FDs?
The compounding frequency of an FD indicates how often your principal and interest are compounded each year.
All banks have a quarterly compounding frequency for their FDs. For example, if you book an FD of ₹1L with Utkarsh bank @8% rate of interest, every 3 months an interest of 2% will be added back to the Principal amount.
Bajaj Finance follows an annual compounding while Shriram Finance follows a monthly compounding frequecy.