Full formBanking & Finance
SFDstands forSinking Fund Deposit
Full Form of SFD
What is SFD?
A Sinking Fund Deposit (SFD) is a specific type of fund that companies, corporations, and financial institutions set aside over time to repay a bond, debenture, or long-term debt at maturity. Instead of paying back the entire principal amount in one lump sum, the company makes regular periodic deposits into a dedicated sinking fund, which accumulates interest and grows into the amount needed for full repayment. In India, sinking fund deposits are commonly used by public sector undertakings, municipal corporations, and large corporates issuing bonds to assure investors of safe repayment. The Reserve Bank of India and SEBI often monitor these deposits as part of bond issuance guidelines, especially for tax-free and infrastructure bonds. Banks and financial institutions may also accept sinking fund deposits as a secure, long-term investment avenue. Understanding SFDs is important for students preparing for banking, finance, and accounting examinations, as questions on bond amortization, corporate finance, and capital structure frequently test knowledge of such concepts.
SFD का फुल फॉर्म
डूबते कोष जमा
Example
The municipal corporation set up a Sinking Fund Deposit with a nationalised bank to ensure timely repayment of its infrastructure bonds issued under the Smart Cities Mission.
SFD — frequently asked questions
What is the full form of SFD?
SFD stands for Sinking Fund Deposit, which is a fund created to gradually accumulate money for repaying a bond or long-term liability.
How does a Sinking Fund Deposit work in India?
Indian companies and PSUs deposit a fixed amount regularly into a sinking fund, which earns interest and is used to repay bonds or debentures at maturity, ensuring smooth debt servicing.
Is Sinking Fund Deposit important for banking exams?
Yes, SFD is a frequently asked topic in IBPS, SBI, and other banking exams under the finance and capital market sections.