How fixed-deposit compounding is modeled
For a reinvestment-style deposit, interest is added back to the balance as it becomes due and can earn interest in later periods. Toolmera models this with A = P × (1 + r/m)^(m×t), where m is the selected number of compounding periods per year.
Actual bank deposit products can use specific day-count, rounding, payout and premature-withdrawal rules. Always compare the estimate with the bank’s product terms.
PDeposit principal
rAnnual contracted rate
mCompounding periods per year
tTerm in years
Example: ₹1 lakh at 7% for 3 years
With annual compounding, ₹1,00,000 at 7% for three years grows to about ₹1,22,504 in the model.
With quarterly compounding at the same nominal annual rate and term, the modeled maturity is about ₹1,23,144. The difference illustrates why compounding frequency matters when product terms reinvest interest.
Annual compounding≈ ₹1,22,504
Quarterly compounding≈ ₹1,23,144
Contracted rate and deposit terms come from the bank
RBI deposit directions define and regulate deposit interest practices, but individual banks set offered rates within the applicable framework. The rate you enter should come from the bank’s current deposit product.
The calculator does not determine eligibility for additional rates, tax treatment or premature-withdrawal adjustments.