With an FD you deposit a sum — say ₹1 lakh — for a chosen period, from 7 days to 10 years, at a rate fixed on the day you invest. The bank pays that rate regardless of what happens to interest rates afterwards, which makes returns predictable.
FDs are considered very safe: deposits up to ₹5 lakh per bank are insured by the DICGC. The trade-off is lower returns than market investments, and breaking the FD early usually costs a small penalty.
For example, ₹1 lakh in a 5-year FD at 7% compounded quarterly grows to about ₹1.41 lakh. The interest is taxable, and banks deduct TDS if it crosses the annual threshold.