A Fixed Deposit / Term Deposit is an account which allows one to deposit money for a fixed time period. When the deposit period is over, (i.e. at maturity of the deposit) the depositors get interest on the amount that is deposited. The fixed deposit interest rates can be as high as 9.5%. Any individual/HUF/Trust/Partnership Firms/Companies/Associations can open a fixed deposit account.
If the deposit is withdrawn before the maturity period, there is generally a penalty which varies from bank to bank. Rate of interest is said to be fixed for the period of the fixed deposit and is subject to variation only in case of the change in the base rate. The interest may be calculated in monthly/quarterly/half yearly basis as fixed at the time of starting the account. The tax pertaining to the account, if any will be deducted from the payment at maturity.
One could obtain a loan pledging a fixed deposit. So you can go for a personal loan, car loan etc. on a fixed deposit. The period of fixed deposit and the limit of deposit amount are generally fixed by the banks. Generally, the fixed deposit at maturity is automatically renewed for the same period.