Fixed deposits are a secure investment choice that provide stable interest rates, senior citizen discounts, flexible interest payment options, no market-related risks, and income tax deductions. You may be familiar with the fixed deposits that banks provide, but some NBFCs also offer them, and that too at higher interest rates.
In an effort to rein in rising inflation, the Monetary Policy Committee (MPC) of the Reserve Bank of India, led by RBI Governor Shaktikanta Das, increased the repo rate to 4.90 earlier this month on June 8. It is important to note that with the RBI's recent increase in the repo rate, interest rates on fixed deposits have become quite competitive as numerous big banks and NBFCs followed suit and increased their FD interest rates.
In a similar vein, HDFC and Bajaj Finance have also increased their interest rates on their fixed deposits with effect from June 27, and July 1, respectively.
READ MORE: 9 public sector banks offer the highest interest rates on savings accounts
Although NBFCs often provide higher interest rates, their FDs are less liquid, and depositors should be aware that NBFCs are not covered by the Rs. 5 lakh guarantee offered by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Here are the highest fixed deposit interest rates offered by NSFCs:
| Name of Banks | FD Interest Rates for General Citizens |
| Shriram Transport Finance Co Ltd | 6.31 % to 7.62 % pa |
| Shriram City Union Finance Co Ltd | 6.31 % to 7.62 % pa |
| Muthoot Capital Services Limited | 6.25 % to 7.25 % pa |
| Kerala Transport Development Finance Corporation Ltd | 5.75 % to 6 % pa |
| PNB Housing Finance Ltd | 6 % to 7.25 % pa |
| Bajaj Finance Limited | 6.20 % to 7.40 % pa |
| HDFC Ltd | 6.75 % to 6.95 % pa |
| Sundaram Home Finance | 6 % to 7 % pa |
| ICICI Home Finance | 5.25 % to 6.95 % pa |
| LIC Housing Finance Ltd | 5.60 % to 6.60 % pa |
Source: Data was taken from the respective banks' websites as of 1 July 2022
NBFCs also offer fixed deposits schemes to senior citizens with attractive interest rates. Senior citizens can enjoy higher returns including 0.50% and above the normal interest rates. Shriram Transport and Shriram City Union are offering a maximum 8.4% interest rate to senior citizens on their FDs.
READ MORE: Top 10 banks offering highest interest rates on their fixed deposits
In the recent news, Yes Bank introduced a product where the interest earned on a term deposit is linked to the RBI's repo rate. In a statement, Yes Bank said “Its new offering will allow customers to enjoy dynamic returns on their fixed deposits (FDs) as the rate of interest will be linked to the prevailing repo rate.”
Fixed deposits provided by NBFCs may make a great complement to your financial portfolio. With the right tenure, you may take advantage of high interest rates on your savings. Therefore, choose the appropriate strategy after understanding what NBFC deposits are all about and how they operate.
